HDB prices below average valuation

The news about having around one-third of the total HDB sales during Q1 hitting the valuation price of HDB flats was one great news for house hunters eyeing on the resale flat market.

In several areas, the level was even much higher. In Sengkang, for example, up to three flats in a five-room unit that ERA Asia Pacific had sold were done at or even below the average valuation. This means that interested home buyers may not need bundles of cash just to purchase their dream house.

Analysts and experts say that after the prices of HDB flats become better as compared to several private residential properties, it’s now going down at a faster rate. In the previous market boom, several sellers are looking for prices that are well above the valuation.

The property agencies that the PropNex, HSR Property Group, The Straits Times, C&H Realty and ERA Asia Pacific, together with the whole HDB market had surveyed, said that a considerable 30 percent to 40 percent of the sales in Q1 were done below the average valuation.

Data from these agencies showed a price collapse for the larger flats, such as executive and five-room flats. In Tampines, for instance, an executive flat was being sold for only $65,000, which was below its valuation of $515,000 while five-room flats in Clementi was sold for $70,000, below the valuation of $500,000.

Several industry observers said the HDB market, whose prices were typically left behind by those on private sector, was finally affected by weakened economy.

The recent flash estimate also showed that HDB prices fell to 0.6 percent in the first quarter, as compared in Q4 2008, making a first slump since 2006.

Resale flat demands also eased during the recession crisis, while HDB was ramping up the supplies of the new flats, according to Colin Tan, research and consultancy head of Chesterton Suntec International. Home buyers are now having additional options as the mass market condominium prices are becoming more affordable.

Eugene Lim, associate director of ERA said home buyers were hesitant to pay above $500,000 for several HDB flats.

“The longer these highly priced flats stay on the market, the more over-exposed they become. Consequently, some had to be sold at big discounts due to buyer resistance”, Lim stated.

The balance of supremacy are now clearly shifting from sellers to home buyers, with experts saying that this trend may be the best time for house hunters to do some hunting.

ERA’s Q1 data showed that locations such as the Tampines, a whopping 55 percent of all transactions for five-room flats were done at or way under the valuation. In Jurong West, ERA accounted 42 percent while in Sengkons, it was 74 percent.

Even smaller types of flat like the three-room units in Ang Mo Kio and flats in Woodlands with four rooms had 42 percent to almost 44 percent of sales being sold below valuation.

Experts pointed out that while most of the flats are selling below the average valuation, it does not signify that people are now selling at a loss, as the HDB prices increase to a hefty 31.2 percent during the property boom. However, first-time home buyers, which have been priced out on the resale market at the time of the economic boost, are now seeing more affordable flats.