Resale HDB flat prices fell by 6.2 percent in 2014, the largest drop since the price index plunged 8.2 percent in 2001, according to PropNex Realty responding to new data published by the housing board on Friday.
On a quarterly basis, resale flat prices fell 1.5 percent in the last three months of 2014, the sixth consecutive quarter of decline.
Meanwhile, fewer buyers entered the HDB market last year, with the resale volume dropping 4.3 percent to 17,318 units from 18,100 units in 2013.
PropNex said resale HDB prices and sales volume were dented by a combination of property curbs such as reducing the Mortgage Servicing Ratio (MSR) cap of 30 percent and the maximum loan term of 25 years for HDB mortgage loans, three-year wait for new PRs before they can buy resale flats, and allowing singles to buy two-room Build-To-Order (BTO) flats in non-mature estates.
As of March 2014, buyers of resale flats can only obtain the valuation report after the deal is sealed and the Option To Purchase (OTP) has been granted to them. PropNex noted this has made buyers more cautious when submitting an offer for a flat.
Meanwhile, the increased supply of BTO flats in recent years has also put pressure on the resale market, said Mohamed Ismail, CEO of PropNex.
“Over 77,000 BTO flats were launched between 2011 and 2013, more than twice the number in the three years before. The Sale of Balance Flats programme has offered a good number and variety of choices for first-and second-time buyers,” he shared.
For 2015, Ismail expects HDB resale prices to correct further by 5.0 to 6.0 percent and sales volume to hit around 19,000 to 20,000 units, which he feels is due to lower asking prices and the new resale policy which has reduced the focus on Cash-Over-Valuation (COV).