BTO supply to be cut as resale flat prices stabilise

File photo showing HDB blocks near Novena. Resale flat prices increased slightly for the first time since the third quarter of 2016.
File photo showing HDB blocks near Novena. Resale flat prices increased slightly for the first time since the third quarter of 2016.ST PHOTO: LIM YAOHUI

HDB trims year's supply by 1,000 to 16,000 amid signs that resale market is picking up

The Housing Board is tapering off its supply of flats amid signs that the public resale market is finally starting to stabilise after a prolonged period of decline.

Resale flat prices increased slightly for the first time since the third quarter of 2016, while the HDB said yesterday that it will cut this year's supply of Build-To-Order (BTO) flats from 17,000 to about 16,000. It adjusts its supply from time to time, depending on market conditions.

HDB's flash estimates showed that resale flat prices were 0.1 per cent higher in the second quarter of this year than in the first quarter, even as prices remained 1.5 per cent lower than where they were in the same period a year ago.

"As the HDB resale market continues to stabilise, HDB will reduce the supply of BTO flats in 2018 slightly," the board said in a statement.

Industry observers said the increase in resale prices could mean they have already bottomed out, and are starting to turn around.

The prices fell by 0.8 per cent in the first quarter of this year, compared with the previous three months.

OrangeTee & Tie head of research and consultancy Christine Sun said prices might even rise slightly in the second half of the year, thanks to interest from "displaced en bloc owners and spillover positive buying sen-timent from the private residen-tial market".

The reduction in BTO flats may also contribute to a slight increase in resale prices, said ZACD Group executive director Nicholas Mak, noting that the recent decline in resale prices has been attributed partially to the strong supply of new flats.

With a smaller supply of new flats for the rest of this year, HDB resale prices might stabilise further and even inch up marginally, he added.

Others were more cautious.

ERA Realty key executive officer Eugene Lim expects prices to remain flat, or increase by no more than 1.5 per cent for the year.

He also noted that different segments of the resale market would be affected differently.

Older resale flats with depre-ciating leases might continue to see dampened demand and fal-ling prices.

Meanwhile "newer flats with exceptional attributes continue to command a premium", he said.

Observers expect resale flats to remain attractive to those who have a specific location in mind or are in a rush to find a home.

Meanwhile, private home prices rose 3.4 per cent in the second quarter from the previous three months, keeping pace with the 3.9 per cent increase in the first quarter, according to flash estimates from the Urban Redevelopment Authority yesterday.

This was led by a 3.8 per cent rise in landed home prices, followed by a 3.3 per cent increase for non-landed homes.

So far this year, HDB has offered 11,373 flats, comprising 7,634 BTO flats and 3,739 balance flats. Next month, it will offer another 4,300 BTO flats in Punggol and Yishun.

Among the potential HDB home buyers this year is undergraduate Mitchell Teo, 26, who relishes the state of the market.

"Whether my fiancee and I get a new or a resale flat, we are in a win-win situation," he said.

"It will either be highly subsidised by the Government or slightly more expensive but with all the attributes we are happy with."

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A version of this article appeared in the print edition of The Straits Times on July 03, 2018, with the headline 'BTO supply to be cut as resale flat prices stabilise'. Print Edition | Subscribe