Permanent residents blamed for increasing resale flat prices

In Singapore, an additional 55,000 permanent residents (PRs) were recorded in the year up to the month of June. The additional number of PRs are believed to be contributing to the increase in resale flat prices.

PRs cannot directly buy new flats from the Housing and Development Board (HDB), so their cheapest option is to buy resale flats. Usually, PRs choose flats with 3 to 4 rooms. Once they are already full pledged citizens of the country, they then upgrade their units to much bigger homes.

When ERA, a leading property agency, disclosed last month that 40 percent of its buyers of resale flat deals were made up of PRs, it didn’t lessen the suspicions that PRs were connected to the rising prices of resale flats. Three years before, PRs accounted for only 20 percent of its buyers.

Many home-seekers quickly concluded that PRs were the ones to be blamed when around 30 percent of the HDB resale market accounted for deals made by them through ERA.

However, based on the statistics of HDB, PRs only bought around 20 percent of flats on resale this year. Throughout the past 3 years, this proportion has remained roughly constant.

HDB also stresses that the increases in the price cannot be only attributed to any one cause.

”Prices of resale flats are influenced by various factors, such as the pace of economic growth and market sentiments,” HDB said.

Eugene Lim, the associate director of ERA in Asia Pacific, quickly concedes that the figures of the company don’t represent the nationwide average.

Lim states, “One reason for ERA's higher-than-average figure is that we are not a local brand, so PRs may have been more inclined to deal with an international company.”

Mister Mohamed Ismail, PropNex’s chief executive, said to give PRs some empathy. The agency only registered around 10 percent of resale deals made by PR buyers from July to September.

”While PRs do create a demand for resale flats, it makes no sense for foreigners who intend to live here to rent a flat, given the high rental costs,” said Mr. Ismail.