Oct 2, 2009 - PropertyGuru.com.sg
As prices of resale HDB units increase in the third quarter by 3.2 percent, the Housing and Development Board (HDB) has stepped up its supply of new flats in order to meet the flash growth in public housing demand.
The increase in price comes after a rebound of 1.4 percent in the second quarter following a 0.8 percent marginal fall during the first quarter. This places the resale prices for HDB at the highest level ever since the preceding two peaks in the last quarters of 1996 and 2008.
The growth has been lately attributed by the Analysts to the greater resale flats’ demand.
ERA Asia Pacific Associate Director Eugene Lim observes, “The surge in demand for HDB resale flats and the consequent rise in prices have been fuelled by a mix of upgraders, downgraders and the increasing population of permanent residents.”
There is a dripping effect from the growth in the prices of private properties, which escalated by 15.9 percent in the third quarter.
Over the next three months, potential home-buyers can expect for an additional 5,000 new Build-To-Order (BTO) flats in various locations. This translates to a monthly average of 1,500 new units, with no less than two BTO launched project per month.
Announcing yesterday the plans of HDB, Mah Bow Tan, National Development Minister, said that with the decision to increase the supply of new HDB units, the increase of prices for resale price index in the future could see some moderation.
With the excellent response to the current BTO launches, supply of BTO flats will be boosted by HDB from the previously planned 8,000 to 9,000 flats for this year. From January to August 2009, HDB launched a total of 3,945 BTO units.
Additionally, an exercise was also launched by HDB yesterday to sell remaining flats from previous sales exercises. Under such schemes, a total of 2,132 'balance flats' will be up for sale. As most of these units are either close to completion or are already competed, HDB hopes these units to be exceptionally popular. A huge chunk of them are already in mature estates.
According to some market watchers, these new supply can remove the pressure from the resale market.
”The grouses of many first-timers will be soothed as the introduction of these flats should, at least temporarily, ease the demand of resale flats,” said Mohamed Ismail, chief executive of PropNex..
Mister Ismail expects a slight dip in the level of cash-over-valuation (COV) primarily as a result of abrupt addition to the market of 2,132 balance flats. He also believes that this will truly support sustainable long-term growth in the resale price index of HDB.
However, the under the BTO scheme, the growing supply of new HDB units might not achieve the immediate effect of the moderation in the increase of prices of resale flats as such flats would not be readily available, said Nicholas Mak, real estate lecturer at Ngee Ann Polytechnic.