SINGAPORE - The number of resale Housing Board flats changing hands has hit a 16-year low, as the latest round of cooling measures bites in.
But prices are still inching up, in a trend that property analysts believe will continue for the rest of the year.
Figures released by the HDB on Friday showed that there were 4,335 transactions in the first quarter of this year - the lowest figure since 1997, when the HDB started revealing the numbers.
On average, the first three months of every year have seen 8,000 transactions.
Resale prices increased by 1.3 per cent this year. While this was more than the 0.6 per cent rise in the same period last year, it was much slower than the 2.5 per cent registered in the last quarter.
Analysts attribute the slowdown to the latest round of cooling measures, chiefly the cap on how much of their income buyers can use to pay off their mortgage.
Since January, loan payments to banks, which previously had no restrictions, have been capped at 30 per cent of a borrower's monthly household income. The cap has also been cut from 40 per cent to 35 per cent for an HDB loan.
With the smaller loans, some buyers can no longer afford to upgrade to larger flats. Which explains why three- and four-room flat sales made up the bulk of the first quarter's transactions, at 66 per cent.
"Permanent residents are doubly affected as they can only borrow from banks, and are also hit by the additional 5 per cent tax for their first home," said PropNex chief executive Mohamed Ismail.
SLP International's head of research Nicholas Mak added that the strong supply of new flats also drew some heat away from the resale market.