Resale-flat prices may tumble 5-8 per cent

SINGAPORE- Resale prices of public homes fell 1.3 per cent in the fourth quarter of last year - the largest drop since the first quarter in 2009 - according to estimates released by the Housing Board yesterday.

And the slowdown may be more acute this year, with resale prices expected to go down by 5 to 8 per cent, according to both PropNex and ERA Realty.

Flash estimates from the Urban Redevelopment Authority showed that private home prices have also declined, by 0.8 per cent, in the fourth quarter of last year, the first time in nearly two years. Prices of non-landed private residential properties in the Outside Central Region dropped for the first time since 2009 by 0.6 per cent.

Where the HDB resale market is concerned, PropNex Realty chief executive Mohamed Ismail foresees a "quiet year (ahead)".

He said that the total number of HDB resale transactions this year could slump below 20,000, the lowest since the turn of the decade. Resale volumes have ranged between 24,000 and 37,000 over the past five years.

"It comes as no the light of the numerous property-buying restrictions," he explained, citing the housing curbs for Singapore permanent residents, who now have to wait three years before they are eligible for a resale flat.

Mr Eugene Lim, key executive officer of ERA Realty, pointed out that the ramped-up supply of Build-To-Order (BTO) flats has offered first-time homebuyers "a good number and variety of choice", significantly reducing demand for resale flats.

He added: "By allowing singles to buy two-room BTO flats in non-mature estates, resale demand from this group is also reduced."

OrangeTee head of research and consultancy Christine Li said that prices of private homes could also moderate between 2 and 5 per cent this year.

"Many buyers have to cut back on affordability now, especially with cooling measures like the Total Debt Servicing Ratio (TDSR) framework," she said.

Under the TDSR, which was introduced by the Monetary Authority of Singapore in June, a property buyer's debt repayments cannot exceed 60 per cent of his gross monthly income.

Ms Alice Tan, associate director and head of research at Knight Frank Singapore, said that demand in the mid-tier and mass-market segments is likely to be more resilient, compared to the high-end segment.

Even so, the falling cash-over-valuation for HDB resale flats may set back demand for mass-market homes, as "HDB upgraders would have less returns to upgrade to private property", she added.

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