Price growth of HDB resale market predicted to dip 3-5% in 2014

Impacted by the slew of property curbs.

According to PropNex, moving into 2014, the HDB resale market can expect negative price growth possibly at the range of negative 3 – 5%. 

Here's more from PropNex:

Resale Housing Board (HDB) flat prices have slipped for the first time in more than 4 years, preliminary data shows.

According to HDB's flash estimates released today, the resale price index dropped by 0.7%—the first time that the index declined since 1Q 2009 (when the index declined by 0.8%).

“This reversal of price growth is expected given the slew of measures announced this year such as the TDSR, reduction of the MSR and the reduction of the maximum loan tenure, which have all impacted a buyers’ purchasing power.

The reduction of the mortgage servicing ratio (MSR) to 30% of a borrower’s gross monthly income has taken its full effect on resale prices – which saw the lowest increase since 2009, as affordability was hit.

The overall median COV (according to PropNex data) had dropped more than 40% to its current $18,000 in 3Q2013 compared to $32,000 at the beginning of 2013,” explained Mr Mohamed Ismail, CEO of PropNex Realty.

“Demand has also been sapped by the release of new BTO flats and PRs having to fulfil 3 year requirement before they can purchase a resale flat, resulted in the resale market effectively serving only the upgraders and limited permanent residents now, resulting in the weakening of price and volume of transactions.

It is also believed that the larger oncoming supply has created a ‘balancing effect’ in the resale market—gradually softening the price growth to a more sustainable level.

Overall, HDB resale price growth for the entire 2013 is expected to be less than 1% to possibly a negative growth.