SINGAPORE: Resale prices for HDB flats reached another record high in the fourth quarter of 2012. Flash estimates showed HDB’s Resale Price Index rose by 2.5 per cent over the previous quarter.
This is the largest growth for 2012 and since the third quarter of 2011, where growth was 3.8 per cent.
This brings the total growth for last year to 6.6 per cent, down from the double digit growth of 10.7 per cent in 2011, and 14.1 per cent in 2010.
Observers attributed this to a short supply of resale flats in the market.
The Resale Price Index rose 0.6 per cent in the first quarter of 2012, 1.3 per cent in the second quarter and two per cent in the third quarter.
Lee Sze Teck, senior manager for research and consultancy at property firm Dennis Wee Group, said: "There is a depleting supply of available resale flats for sale, after HDB has increased the MOP (Minimum Occupation Period) period to five years in 2010.
"Also, at the same time, they increased the allocation of BTO flats and ECs to second—timers in March 2012, so this actually resulted in lesser flats being offered for sale in the resale market."
Chris Koh, director at Chris International, said: "At least we don’t see prices rocketing and shooting up at such large figures as the years before. But perhaps the reason why we are not seeing prices at bay or stabilising is because we still see a very high demand compared to the supply.
"As long as the demand still outweighs the supply, we will still see prices going up. So what we are seeing is people rather rent out their flats than sell it."
Analysts also expect the cash premium for resale flats to keep rising.
According to data from property firm Dennis Wee Group, the Cash—Over—Valuation (COV) rose by 17 per cent, from 31,000 in the third quarter to 36,000 in the fourth quarter.
Mr Lee expects the COV to breach the record median in early 2013.
The record cash premium is S$38,000 and was set in the third quarter of 2011.
HDB also said it will now target to launch at least 23,000 BTO flats. HDB had earlier said it would launch at least 20,000 BTO flats in 2013.
Mr Lee said that increasing the BTO supply will have a "psychological effect" on prices in the resale market.
He added: "This increase in BTO supply will help to keep resale prices in check in 2013 to about five per cent. The additional of 3,000 more units is probably to cater to some changes in policies in 2013."
"I believe they’re going to change some of the policies in terms of allocation of BTO flats, maybe to first—timers, or families with young kids, or even to singles, which is why maybe they have to increase the number of BTO flats in 2013," said Mr Lee.
Mr Koh said: "It will take care of one group, which are the first timers to qualify for BTO flats. Maybe even a small group of upgraders because every BTO has a few flats set aside for them. But for those who are not eligible to buy a BTO, they’re still in that resale market. And that’s the group of people who will have to pay the premiums for that flat, if not they won’t get the flat."
The first batch of 3,346 BTO flats in Choa Chu Kang, Yishun, Hougang, Tampines, Kallang Whampoa, and Ang Mo Kio will be offered for sale later this month.
Analysts expect projects in mature estates like Tampines and Ang Mo Kio to draw the strongest demand."
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