By Kenny Chee
Any increase in home prices is expected to remain small for the remaining two quarters of the year, said property insiders.
This is despite the fact that both public- and private-home prices in the second quarter have risen faster than in the first quarter, based on government estimates released yesterday.
Reasons experts gave for prices staying flat include stable demand for resale flats; and private-home owners not inclined to sell their homes when interest rates are low - as this means they do not have to pay high interest rates on their loans.
Resale-flat prices in the second quarter rose by 1.3 per cent over the previous quarter, according to Housing Board (HDB) figures. This is more than double the 0.6 per cent rise in the first quarter over the final three months of last year.
Private-home prices in the second quarter rose 0.4 per cent over the previous quarter, based on Urban Redevelopment Authority data. This contrasts with the 0.1 per cent drop in prices in the first quarter over the fourth quarter last year.
This bucked the trend of property price appreciation showing a slowdown in the previous two quarters.
Mr Lee Sze Teck, senior manager for research and consultancy at Dennis Wee Group, said resale-flat prices saw an upswing due to demand from home buyers who needed to buy such flats urgently.
He noted that the March Build-To-Order and Sale of Balance Flats exercises were "many times oversubscribed" and there would have been many people who were not successful in balloting for a flat.
And, with cash-over-valuation (COV) - the sum paid over and above the valuation of a flat - also diving as much as 27.3 per cent in the last quarter, Mr Lee said unsuccessful home buyers would have turned to the resale market.
Ms Chua Chor Hoon, DTZ head of Asia-Pacific research, said resale-flat and private- home prices rose partly due to low interest rates and a buoyant job market.
"The benchmark prices set in new launches led to resale sellers upping their prices and buyers turning to the private resale and HDB market for better value," she said.
But PropNex Realty chief executive Mohamed Ismail said HDB resale prices "have reached their peak" and he expects growth in prices to be less than 2 per cent in the next quarter.
"We do not expect any substantial growth in prices in the coming quarters, as buyers are becoming reluctant to pay high COVs."
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