Prices of HDB resale flats is likely to decline for the rest of the year: Analysts
Property analysts say the decline in the prices of resale flats is likely to continue for the rest of the year.
This comes after the Housing and Development Board released a report today which showed prices of resale flats fell by 1.6 per cent in the first three months of the year.
Our news desk finds out why.
The fall in prices of resale flats is larger than the advance estimate of a 1.5 per cent decline made earlier this month.
Analysts say this is the result of a convergence of measures imposed last year to cool the market and the continued supply of new flats.
Research Head of Savills Singapore, Alan Cheong expects prices to fall between 0.5 and 1.5 per cent in the next few months.
"The minimum mortgage service ratio that the new buyers are subjected to. This sort of put a cap on the ability to overpay. And new rules like Permanent Residents need to wait 3 years before they can buy HDB resale flats and these two factors put a dampen on the market."
Another reason cited is the revision in resale procedures to reduce the focus on Cash-Over-Valuation.
Director of Chris International, Chris Koh explains.
"Buyers are a bit more cautious. They are being very careful now when they make their purchase because they now do not have a valuation to fall back on. So when they put in the offer, they tend to offer slightly lower just incase the valuation will not be something that they expect. So this is putting pressure on the prices that we may see this correction to occur."
The number of resale transactions in the first quarter of this year also fell by 5 per cent to 3,781.
Analysts attribute the fall to the traditional festive season lull.
Here's Chris Koh from Chris International again.
"Two weeks before Chinese New Year, sellers refused to open their houses. Buyers will wait till after Chinese New Year. Chinese New Year itself another two weeks. Until 15th day of Chinese New Year, then you will see sellers and buyers coming back into the market."
Mr Koh expects the transaction volume to pick up by up to ten per cent in this second quarter (April to June).
-By Lim Jia Qi
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