Cooling measures dampen HDB resale and private home prices

Effects of the implementation of new government rules are starting to be felt, With the HDB RPI is set to rise 2.4% to 171.9 and the private home prices expected to inch up 2.7% to 194.8.

The rise reflects a smaller growth in 4Q10 Q-o-Q for the two sectors.

"Although these figures indicate yet another all-time record for both the public and private housing markets, it is important to note that the growth is indeed slowing down and attaining more sustainable levels," said PropNex CEO Mohamed Ismail.

Ismail said the continuing growth for the RPI can be mainly attributed to the higher transaction prices for resale flats, despite falling Cash-Over-Valuation (COV) levels.

He added that the expected 23% Q-o-Q dip in Singapore’s overall median COV level for 4Q10—to be released on 28 January 2011—is in line with HDB’s flash estimate of a drop to $23,000 for the quarter.

HDB statistics for 4Q10 show overall median COV levels dropping from $30,000 in 3Q10 to $26,000 in October, $23,000 in November and $20,000 in December.

Ismail said that prices for flats are still climbing since valuations for resale flats transacted in 4Q10 were based on prevailing caveats for flats in the vicinity.

"There is a certain lag time of about two months and hence the prices overall are still climbing. It is important to note, though, that our records show median resale prices inching up by about 1.5 to 3% only from 3Q10 to 4Q10,” he said.

PropNex expects the overall median COV level to go down to around $18,000 to $20,000 for 1Q11, while the HDB RPI is projected to grow about 2% per quarter in 2011.

Ismail said growth will be propelled by the influx of Build- To-Order flats that will ease demand on the shorter supply of flats, whose sales were affected by the cooling measures announced in August 2010.

For 2011, PropNex expects growth to come from the newly launched Executive Condominiums and other mass market projects.