HDB resale prices have been lacklustre due to the large supply of unsold BTO flats, says one analyst.
Despite a higher number of transactions, resale prices of HDB flats dipped by 0.1 percent in Q3 2018 on a quarterly basis, said the Housing and Development Board (HDB) on Friday (26 Oct).
Between July and September, the number of HDB resale deals increased to 7,063 cases, up 18.9 percent quarter-on-quarter and 21.6 percent on an annual basis.
“If the resale volume continues to remain robust in the next few quarters, it would slow down or even reverse the decline in the HDB resale price index,” ZACD Group executive director Nicholas Mak told the Straits Times.
In a report by TODAYonline, Huttons Asia research head Lee Sze Teck said the performance of HDB resale prices has been lacklustre due to the large supply of unsold Build-To-Order (BTO) flats.
In fact, the Housing Board has offered about 21,000 BTO units per annum since 2011. Although inventory has eased, Lee noted that there’s still a large volume of remaining BTO flats based on the number of Sale of Balance Flats and Re-offer of Balance Flats exercises.
Moreover, permanent residents (PRs) are not permitted to buy a HDB flat within the first three years of obtaining their PR status.
“With demand still largely constrained to PRs, singles and second-timers, the resale market is unlikely to pick up anytime (soon),” he said, adding that the huge BTO supply and the urgency of downgraders and upgraders needing to dispose their flats only worsens the glut in the market.
Similarly, ERA Realty key executive officer Eugene Lim told the Straits Times that HDB resale prices are expected to remain flat over the short term even though the government announced new measures to help HDB dwellers, as details of these new policies are still being finalised.
These new measures include the Home Improvement Programme 2 (HIP 2), whereby HDB flats will be upgraded a second time once their age hits 60 or 70, and an extension to the programme that allows elderly homeowners to sell a part of their leases back to the government.
Meanwhile, the Housing Board announced that it will offer around 3,800 BTO flats in Yishun, Tengah, Tampines, Sengkang and Sembawang next month. It will also hold a concurrent Sale of Balance Flats exercise.
In particular, those buying BTO flats in Yishun, Sengkang and Sembawang will have a shorter waiting time of 2.5 years instead of the usual three to four years.
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Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email firstname.lastname@example.org