Friday, January 2, 2009

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HDB Flash Estimate 4th Quarter 2008 Resale Price Index: HDB Resale flat price index rose 1.5%

Housing & Development Board's resale flat price index rose 1.5% in fourth quarter 2008 over the preceding quarter. This was slower than the 4.2% quarter-on-quarter rise in Q3 2008. For the whole of 2008, the resale flat price index registered a 14.6% gain. The data indicates that HDB resale flat price is peaking, which does not come as a surprise given the increased momentum at which the economy is slowing.

Experts, however, said this resistance to downward pressure in the HDB resale market is expected to continue despite the economic downturn.

Eugene Lim, associate director, ERA Asia Pacific, said: "Buyers are coming from people who are upgrading (and) people who are downgrading... also, from the increase in the population of PRs (permanent residents). So the (demand for) HDB resale flats is very strong."

Observers said they expect flat or slow declines for public housing prices compared to steeper devaluations in the private home sector. They added this is the trend during times of uncertainty when home buyers opt for the safer option of HDB flats.


May also want to read:
99 Leasehold Property: Calculation of Depreciation Rate based on Singapore Land Authority Data
Spore Property History 1960-2008
Property Investment Tip: Don't put all your eggs in one basket
HDB Resale Price Index 1990-2008: Graph & Chart

5 comments:

Anonymous said...

Another 25% drop is possible if the economy remains down turn for another 9 mths

Anonymous said...

Are you referring to private property price? I agree with the experts' view that HDB resale flat price will remain flat or decline only marginally because of demand simply outstrip supply.

Anonymous said...

I remembered that in early late 2006 / early 2007 when the private property market was just heating up but the HDB market was still dead, I told a few friends that HDB market would soon rise and it sure did. Now, I see HDB market falling since private property market has already plunged 5.5% and is forecast to plunge even more. These 2 sectors are intricately linked given that Singapore is such a small market. Common sense dictates that when times are bad and retrenchments are plentiful, potential buyers would hold back property purchases due to low confidence and that would alter the existing demand and supply situation.

It's true that HDB demand outstrips supply in 2007 mainly due to PRs buying flats because rents were getting ridiculously high. Imagine paying $1800 per month for a 3 or 4 room flat when you could just pay $800 to $1000 monthly loan installments if you were to buy a unit. In a perverted sense, the PRs were forced to buy. But as we know, many foreigners were retrenched and returned home, thus increasing the supply of rental condos and HDB flats. When rent decreases due to the increased supply, PRs would not be so anxious to buy and that in turn would reduce demand for resale HDB flats. In fact, HDB rents are already coming down gradually. In the end, what we will have is more supply than demand and that will inevitably lead to a fall in prices.

HDB Resale buyers should not rush in now but wait for another 6 to 12 months. What goes up must come down and HDB flats would not be any different, no matter what the property analysts say. After all, they were wrong so many times in 2007 so why believe them now? If they are so good, they would be the richest bunch in Singapore but hey, they are not.

All we have to remember is that property market follows the stock market and when supply exceeds demand, prices will fall. It's all dominoes falling one after the other and the HDB market would be next. If you care to look carefully, the HDB domino is already falling.

Be patient, my fellow investors, be patient......

Secret Propertier said...

I remembered that in early late 2006 / early 2007 when the private property market was just heating up but the HDB market was still dead, I told a few friends that HDB market would soon rise and it sure did. Now, I see HDB market falling since private property market has already plunged 5.5% and is forecast to plunge even more. These 2 sectors are intricately linked given that Singapore is such a small market. Common sense dictates that when times are bad and retrenchments are plentiful, potential buyers would hold back property purchases due to low confidence and that would alter the existing demand and supply situation.

It's true that HDB demand outstrips supply in 2007 mainly due to PRs buying flats because rents were getting ridiculously high. Imagine paying $1800 per month for a 3 or 4 room flat when you could just pay $800 to $1000 monthly loan installments if you were to buy a unit. In a perverted sense, the PRs were forced to buy. But as we know, many foreigners were retrenched and returned home, thus increasing the supply of rental condos and HDB flats. When rent decreases due to the increased supply, PRs would not be so anxious to buy and that in turn would reduce demand for resale HDB flats. In fact, HDB rents are already coming down gradually. In the end, what we will have is more supply than demand and that will inevitably lead to a fall in prices.

HDB Resale buyers should not rush in now but wait for another 6 to 12 months. What goes up must come down and HDB flats would not be any different, no matter what the property analysts say. After all, they were wrong so many times in 2007 so why believe them now? If they are so good, they would be the richest bunch in Singapore but hey, they are not.

All we have to remember is that property market follows the stock market and when supply exceeds demand, prices will fall. It's all dominoes falling one after the other and the HDB market would be next. If you care to look carefully, the HDB domino is already falling.

Be patient, my fellow investors, be patient......

Leroy said...

Not very clever to assume that HDB prices will stay intact. While there are "down graders" from private homes, they are also many HBD dwellers whom, probably, need to downgrade in the near future. Maybe the smaller HDB prices will benefit in the short term until new supply is ready.

As of October 2008, some 33,000 flat owners owed HDB arrears of three months or more. They make up 8% of the 420,000 households with outstanding HDB loans. The historical percentages were 5% in 2003 and 4% in 2002.

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