Price squeeze on HDB resale flats tightens further

Flash estimates show price decline is steeper than that for private homes

IF THE private property market is suffering price pangs, then those seeking to offload their public housing flats are under even greater pressure.

Housing Board resale prices are still falling more steeply than those of private homes, official flash estimates showed yesterday.

HDB prices fell 1.6 per cent in the third quarter, faster than the previous quarter's fall of 1.4 per cent.

The decline in private property prices stabilised somewhat, slipping 0.6 per cent in the latest quarter, compared to the 1 per cent decline previously.

This is the fifth straight quarter of decline in the HDB market and the fourth in the private market, with HDB resale prices consistently falling more than those for private homes. Compared to a year ago, HDB resale prices have fallen 6 per cent and private home prices, 3.8 per cent.

Experts said the cooling measures have hit public property harder. "The HDB buyers' ability to pay is severely affected by the mortgage servicing ratio of 30 per cent," said ERA Realty key executive officer Eugene Lim, referring to the cap on how much income can be used to service housing loans.

The private market also continues to see some demand from aspirational buyers and investors, added R'ST Research director Ong Kah Seng.

SLP International Property Consultants head of research Nicholas Mak noted that the private property index includes both new sales, which have stayed stronger, and private resale, while the HDB index is just for resale flats.

The slowdown in the private market was less severe in all segments except landed property, according to Urban Redevelopment Authority flash figures.

In the city centre, prices for non-landed private homes fell 0.9 per cent, less than the second quarter's 1.5 per cent slide.

The suburbs saw a gentle dip of 0.2 per cent, compared to 0.9 per cent before. In the city fringe, prices fell 0.1 per cent, compared to 0.4 per cent previously.

But landed property prices continued to fall steadily. Prices were down 1.7 per cent, the same decline as in the previous quarter.

The third quarter saw developers launching more projects and pricing their launches attractively so as to move sales, said Mr Lim.

Experts agree that the downward trend is set to continue till at least the first half of next year.

"The softer fall may be a sign that prices have stabilised and (the market) is starting to find its footing," said Mr Lim.

ERA's projection is that HDB resale prices will fall by 5 to 8 per cent for the whole year, and private home prices by 5 to 6 per cent.

Mr Ong, however, thinks private home prices may start falling faster than HDB resale prices in the next six to nine months. The demand for private property could dry up, he said. "As home loan curbs continue, aspirations have to take a reality check."

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