Experts: Home prices stabilising

Experts: Home prices stabilising

WHILE public- and private-home prices in the third quarter have reached their highest for the year so far, they are showing signs of stabilising, property experts said.

Figures released by the Housing Board (HDB) yesterday showed that HDB resale prices rose by 2 per cent in the third quarter from the previous quarter to hit a new high. This is higher than the 1.3 per cent increase in the second quarter.

The HDB resale-price growth for the first three quarters of this year stands at 3.9 per cent, lower than the annual growth of 14.1 per cent in 2010, and 10.7 per cent last year.

Data from the Urban Redevelopment Authority showed that prices of private homes rose by 0.6 per cent in the third quarter, higher than the 0.4 per cent rise in the second quarter.

Mr Mohamed Ismail, chief executive of PropNex Realty, said that HDB resale prices are "slowly heading towards stabilisation" as their increase in the third quarter of the year was much less than the "steeper growth of 8.5 per cent at the same time last year".

This year's increase still "came as a bit of a surprise", especially with a greater supply of Build-To-Order (BTO) flats since last year and the moderation of HDB resale prices in the first two quarters of this year, he said.

Mr Ismail added that demand for resale flats is driven mainly by those "who prefer not to wait" for BTO flats, which could take a few years to be ready.

He said it is possible that the HDB resale market also attracted buyers who are ineligible for BTO flats - such as permanent residents and singles - as well as home buyers "put off by the inflated prices" in private properties.

He expects the upward pressure on HDB resale prices to abate with a larger supply of ready BTO flats in the future, even though it would take some time for the effect of the increased supply to be felt.

Mr Nicholas Mak, executive director of research and consultancy at SLP International, expressed similar sentiments. He said HDB resale prices will experience "steady growth, without changing too drastically".

HDB will offer the largest annual supply of 27,000 BTO flats this year, 2,000 units more than the 25,000 originally planned.

And, in the next three or four years, the number of private- housing and executive-condominium units to be completed could come up to about 104,000.

Even with the existing market conditions, Ms Alice Tan, senior manager of research at Knight Frank Singapore, envisaged prices of non-landed homes to "remain stable".

She said that the increase in private residential supply in the pipeline, together with a rising vacancy rate amid cooling measures, could put downward pressure on prices of private residential properties in the near to medium term.

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