HDB prices increased 1.4 percent

Prices of flats from Housing Board has increased by 1.4 percent in Q2, reversing the dip in Q1 at 0.8 percent.

The transactions also rose 58 percent in the three months ended June 30, as buyers return to the market and confidence grow.

One of the reasons for the resilience in HDB market despite tough economic conditions is the declining of cash amount required upfront to purchase a resale flat. It is called a cash-over-valuation or COV and it is faltering or stable at least in all types of flat.

Yesterday, HDB released fresh figures showing that the median COV in all types of flat fell to only $3,000 in Q2 compared to $4,000 in Q1. The median COV for three- and four-room flats is $5,000 while it remained zero for executive and five-room flats, for both in Q1 and Q2 period.

For two-room flats, the median COV declined to $6,000 in Q2 from $7,000 in Q1.

This change is marked from the property boom in 2007, when the median COV reached $22,000 in Q4, forcing a lot of first-time buyers to leave the resale market.

The COV has declined due to the valuations of many resale flats, said Associate Director Eugene Lim of ERA Asia Pacific.

So even if values of resale flats in HDB are high, they seem affordable now as buyers can acquire bank loans to purchase them and don’t have to get high cash amounts.

Sales activity in Q2 was robust, with a total transaction of 10,184 compared to 6,446 in Q1. They have also increased by 31 percent from 7,763 units that were sold in Q2 last year.

Sales for five-room flats rose by 80 percent – of which 2,713 sales were moved – in Q1 while transactions for executive flat increased by 100 percent to 753. Sales in four-room flats also rose to 3,787 from 2,488.

Chief Executive Mohamed Ismail of PropNex noted that bigger flat types had experienced low sales in a period of three quarters until March due to the growing concerns on the worst recession in Singapore.

“These numbers are a clear sign that people's market confidence is growing”, Ismail said, adding that the issues feedback indicated that supply in mature estates had been exceeded by demand.

Sales in bigger types of flat also explained the high demand from upgraders of HDB, who sold their previous flats to purchase private homes, Property Veteran Nicholas Mak said.

Sales of private homes, especially for suburban condos in the mass-market, have experienced good sales since February 2009.

Meanwhile, the rents for HDB were stable. The median rents for two- and five-room flats for Q2 remained the same, but decreased by $100 for executive flats, three- and four-room flats.

HDB is planning to launch 6,000 units for its build-to-order programme for the next six months. Of which, 2,400 will be smaller flats. Most of the new flats will be located in Punggol. Two thousand flats were launched so far by HDB in Punggol, Woodlands, and Sengkang this year.