Singapore HDB resale flat prices start to ease

Singapore HDB resale flat prices start to ease

First-quarter dip is first since 2006 and points to end of record run

By Jessica Cheam

Larger units bore the brunt of the price drop in HDB flats, and property agencies expect a decline of between 2 per cent and 10 per cent in the resale market for the full year.

PRICES of HDB resale flats fell in the first quarter of this year - the first decline since 2006 and a sign that the two-year run of record-breaking gains has ended.
Flash estimates yesterday showed that prices dropped by 0.6 per cent for the first three months, compared with the fourth quarter of last year.

Prices in the fourth quarter had increased by 1.4 per cent over the previous period and helped drive resale flat prices up by a hefty 31.2 per cent over the past two years.

The latest numbers caught industry experts by surprise and underline how the worsening recession has hit the Housing Board (HDB) market sooner than expected.

Many analysts had predicted further increases in resale prices with a decline becoming apparent only later in the year.

Agency chiefs from both PropNex and ERA Asia Pacific had recently forecast that HDB resale prices could rise by a further 3 per cent to 5 per cent this year.

But yesterday’s numbers have altered expectations overnight, with analysts now predicting a decline of anything from 2 per cent to 10 per cent this year.

Tell-tale signs in the market signalled that prices have started heading southwards, in tandem with private property prices, which plunged 13.8 per cent for the first quarter of this year, said Prop- Nex chief executive Mohamed Ismail.

‘The gloomy outlook for the past few months, coupled with more retrenchments, have hit home, and even the HDB market is feeling it,’ said Mr Ismail.

PropNex and ERA have reported buyer resistance to flats above $500,000, with five-room and executive flats feeling the brunt of the price slide.

Such flats are now being sold at below valuation, in some cases up to $40,000 under, said ERA associate director Eugene Lim.

However, there is still strong demand for three- and four-room flats as buyers and permanent residents go for the safer option, he said.

ERA transactions showed that four-room units made up 41 per cent of its sales in the first quarter, compared with 38 per cent in the fourth quarter last year.

Despite the slight dip in prices, HDB flats are generally ’still holding’ due to relatively strong demand, say experts.

Valuations of bigger flats are also likely to be lower in the face of decreasing transaction prices.

‘This will have the multiplier effect of bringing down prices for these flat types,’ said Mr Lim.

HDB’s latest numbers did not surprise Knight Frank’s director of research and consultancy, Mr Nicholas Mak, who had predicted bearish numbers from last year.

‘HDB prices cannot go against the broad economic trend, when almost all asset prices are depreciating,’ he said.

Chesterton Suntec International’s head of research, Mr Colin Tan, said it is logical that HDB resale prices have ‘turned a corner’, partly because the supply of attractively priced new flats has increased.

As demand for HDB resale flats has relatively eased, so have their prices, and they will fall gradually from here, although not drastically, he added.

ERA and Knight Frank are estimating a decline of 5 per cent to 10 per cent over the year, while PropNex has put it at 2 per cent.

Demand for resale flats will continue to come from permanent residents, people downgrading from private properties to HDB flats and those downgrading from larger to smaller homes, said ERA’s Mr Lim.

He expects total resale transactions for this year to be around 30,000 units, compared with last year’s 28,419 units, with three- and four-room units making up the bulk of sales.

Demand for smaller flat types looks set to remain high amid the recession.

HDB’s quarterly sale of 150 two- and three-room flats spread across Punggol, Queenstown, Sengkang and Yishun attracted 427 applications yesterday by the close of its first day.

Source : Straits Times - 02 April 2009

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Families can now seek casino ban

Families can now seek casino ban

Counselling will be a key safeguard before a no-entry order is slapped

By Theresa Tan

Serial gamblers like the one above can be banned from casinos under family exclusion orders, a social safeguard to ensure casinos do not lead to more gambling problems. — ST PHOTO: NURIA LING

SINGAPORE’S latest move to control gambling addiction ahead of the opening of the two casinos - allowing families to apply to have loved ones barred from gaming tables there - took effect yesterday.
The introduction of ‘family exclusion orders’ makes Singapore only the second place after the state of South Australia to have such a social safeguard, said the National Council on Problem Gambling.

To get someone banned, families will have to file applications at the Tanjong Pagar Family Service Centre (FSC).

They will have to tell counsellors and a committee appointed by the council how the gambler’s actions have hurt them - by plunging them into financial hardship, for example.

Once issued, the orders are permanent, and can be revoked only if the family or the gambler applies to do so, and the council agrees.

Before anyone is banned, both the gambler and his family will be counselled.

If the family decides to go ahead with the application, they will be interviewed by a committee of assessors before the order is granted.

The orders are part of a number of social safeguards to ensure that the arrival of casinos does not result in more gambling problems. Other moves include imposing a levy for local residents who go to the casinos.

Still to come later this year: voluntary self-exclusion and third-party exclusion orders, where undischarged bankrupts and those receiving public assistance will be barred from the casinos.

Singapore will be the first in the world to have third-party exclusion orders, and the council estimates that about 29,000 people will be barred under them.

Asked why counselling is needed before family exclusion orders are approved, council chairman Lim Hock San said: ‘Often, families with problem gambling issues have more immediate financial and stress issues to manage, and if these are not tackled at the same time, the family may not be able to cope emotionally and financially.’

Mr Charles Lee, a senior counsellor at the Tanjong Pagar FSC, said counselling will also help a gambler realise how he has hurt his loved ones, and try to get him to take responsibility for his actions.

Dr Munidasa Winslow, a psychiatrist and addictions expert, said such a screening process would also weed out serious applicants from frivolous ones.

Serial gambler Robin (not his real name) said he expected his siblings would want him banned from the casinos.

The 54-year-old ex-bookie lost more than $150,000 betting on soccer, horses, and other games, and owes a few loansharks more than $10,000.

Said the bachelor: ‘I thought gambling could be my job. But it has ruined my life. I lost my house and almost lost the support of my family. Now, I’m as good as destitute.’

If South Australia’s experience is any guide, however, Singapore will see few applications for family exclusion orders. In the four years up to last June, there were 18 applications for such orders in the Australian state, and only eight were issued. The rest were dismissed or withdrawn.

National Council on Problem Gambling member Mildred Tan said some Singapore families may be reluctant to seek a ban because taking such a step might strain ties beyond breaking point.

But she added: ‘Whatever the number that comes, we will offer all the help we can to start the healing process.’

Exclusion order: How to get it

Family members have to go in person to the Tanjong Pagar Family Service Centre (FSC), located at #03-06 Central Plaza, 298 Tiong Bahru Road, to apply for the order.

The problem gambler and his or her family members are counselled.

If the family decides to proceed with the exclusion order, the Tanjong Pagar FSC will submit a social report of the case to the National Council on Problem Gambling’s secretariat.

A hearing by a committee of assessors is held within 28 days of the application.

The applicant and the respondent will be invited to the hearing, and the committee will decide whether to issue the order.

The National Problem Gambling Helpline can be reached on 1800-666-8668.

Source : Straits Times - 02 April 2009

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G-20 leaders divided on resolving crisis

G-20 leaders divided on resolving crisis

Sarkozy and Merkel stand firm on demand for tighter financial regulation

British Prime Minister Gordon Brown (second from left) and his wife Sarah (far left) with US President Barack Obama and his wife Michelle at Mr Brown’s No. 10 Downing Street office in London for a meeting. — PHOTO: ASSOCIATED PRESS

LONDON: World leaders converged for an emergency summit that holds scant hopes of finding a magic-bullet solution for the economic crisis that brought them hurrying to London.
Even as President Barack Obama and the others were arriving for the meeting, the United States acknowledged that its allies would not go along with a massive burst of stimulus spending, while Europe was forced to backpedal from hopes for tighter financial regulation.

Instead, leaders are trumpeting the limited common ground they could reach, including more money for the International Monetary Fund and closer scrutiny of hedge funds and tax havens.

With turbulent world markets watching closely, the stakes are high, especially for America’s new president, stepping onto the world stage for the first time to deal with the economic crisis and to meet face-to-face with many other leaders.

One global change is being acknowledged: The forum for grappling with world economic problems has grown beyond the established eight post-war economies that dominated previous economic summits - the US, Britain, Germany, France, Japan, Canada, Italy and, more recently, Russia. Now, 20 nations are coming together in London, with fast-growing developing economies such as China, India, Brazil and Saudi Arabia - important players in any effort to coordinate economic policy - sitting as full negotiating partners.

Global leaders were quarrelling up to the last minute before the summit.

But Mr Obama and British Prime Minister Gordon Brown, who met yesterday , exuded optimism about a global deal to help pull the world out of recession, downplaying a rift with French President Nicolas Sarkozy ahead of the summit.

Mr Obama said there was ‘enormous consensus’ between the world’s rich and emerging countries on plans to kickstart the global economy. But Mr Sarkozy warned that neither his country nor Germany would align with any ‘false compromises’, suggesting that a clear deal was not secure.

The London summit began with a formal dinner yesterday before business meetings today.

In a joint press conference with Mr Brown after the pair held talks at No. 10 Downing Street, Mr Obama said that any differences were ‘vastly overstated’.

‘I am absolutely confident that this meeting will reflect enormous consensus about the need to work in concert to deal with these problems,’ said Mr Obama.

Mr Brown, too, sought to play up consensus. ‘We are within a few hours, I think, of agreeing on a global plan for economic recovery and reform,’ he said.

In contrast, Mr Sarkozy said he would rather risk a public dispute than accept a vague consensus on key issues such as financial-market regulation and a crackdown on tax havens.

‘I will not be a part of a summit that concludes with a statement of false compromises, which doesn’t deal with the problems we face,’ Mr Sarkozy said in an interview broadcast live on Europe-1 radio early yesterday.

Mr Sarkozy and German Chancellor Angela Merkel are pushing hard for visible results on regulation, such as closer tabs on hedge funds and credit rating agencies, and naming and shaming of tax havens if they fail to bow to pressure and end bank secrecy.

After meeting Dr Merkel yesterday in London, Mr Sarkozy said at a joint press conference that the aim of agreeing on new regulations for the financial sector is ‘non-negotiable’ for France and Germany at the summit.

‘Without new regulations, there will be no confidence. And without confidence there will be no recovery. It’s a major aim, non-negotiable,’ he said.

‘Germany and France will speak with a single voice… our aims are the same, both on principles and in practice. We demand results,’ added Mr Sarkozy. He did not repeat a threat he made on Tuesday to walk out of today’s summit if other leaders refuse to address calls for stronger regulation of global finance.

Primer on G-20 London summit
Robin Chan looks at the key players, the issues to watch and who has been saying what about the Group of 20 (G-20) summit.
Who are the G-20?

Twenty of the world’s largest developed and developing nations - the United States, Canada, France, Germany, Italy, the United Kingdom, Turkey, Australia, China, Japan, India, Indonesia, South Korea, Russia, Argentina, Brazil, Mexico, Saudi Arabia, South Africa, and the European Union.

Who are the ones to watch?

China is poised to take centre stage as the world’s banker.

Brazil, a powerful emerging economy, will be represented by outspoken President Luiz In?cio Lula da Silva, who has blamed the financial crisis on ‘the irrational behaviour of white people with blue eyes’.

Japan has lessons to impart, having suffered a similar bust in the 1990s.
What are the key issues?

FIGHTING PROTECTIONISM: Many leaders have spoken out against protectionism, yet a World Bank study shows that 17 of the G-20 countries have implemented trade-restricting measures since last November.

TO STIMULATE OR NOT?: The US, Britain and Japan have already flooded their economies with trillions of dollars of cash and they want others to do the same. There is talk of a worldwide G-20 stimulus package to the tune of US$2 trillion (S$3 trillion). But Germany leads a group of European countries opposed to this. They want to see the effectiveness of existing measures first.

MORE FINANCIAL REGULATION: French President Nicolas Sarkozy is pushing for heavier financial oversight to avoid a future crisis. He wants tighter regulation of everything from managers’ pay packages and rating agencies to accounting policies and financial products. He has threatened to walk out if his demands are not met.

REFORMING THE IMF: There are calls for the International Monetary Fund (IMF) to be rejuvenated and given more powers. Richer developing nations like Brazil and China also want more say at the IMF to better reflect their growing economic stature.

A NEW RESERVE CURRENCY?: China is mooting a new reserve currency run by the IMF to replace the US dollar. A reserve currency is used in international trade and held by governments as part of their foreign exchange reserves. The suggestion sparked a massive sell-off of US dollars earlier this week.

TAX HAVENS: While not a central issue, the US, Britain and France are pushing for more action against tax havens, insisting that countries should be named and shamed if they fail to bow to pressure to end bank secrecy.
G-20 trivia

WORLD LEADERS GET GOODIE BAGS: The official gift bag includes a tie designed by one of three top-class British tailors (Ozwald Boateng, Timothy Everest and Richard James), a tea towel from linen producer Thomas Ferguson Irish Linen, Kelly Hoppen candles and Rococo chocolates.

LAST NIGHT’S DINNER: Celebrity chef Jamie Oliver whipped up the opening dinner at No. 10 Downing Street last night. His menu featured organic farmed salmon from the Shetland isles and lamb from the Elwy Valley in north Wales.

OBAMA SKIPS HEATHROW: The last time a US president - Mr George W. Bush - flew into London’s Heathrow Airport, there was chaos. So Air Force One dropped President Barack Obama off at Stansted airport, where he switched to his personal helicopter Marine One and then to his presidential Cadillac.
Sources: Guardian, Telegraph and Bloomberg

ASSOCIATED PRESS, REUTERS, AGENCE FRANCE-PRESSE

Source : Straits Times - 02 April 2009

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Record 13.8 per cent fall in Singapore private home prices

Record 13.8 per cent fall in Singapore private home prices

By Joyce Teo, Property Correspondent

PRIVATE home prices fell a record 13.8 per cent in the first quarter of the year, with values of city-centre and city-fringe homes hit the most.
Flash estimates released yesterday by the Urban Redevelopment Authority (URA) reveal that the fall is the largest since the index started in 1975.

And they show that the market has now lost half of the gains it chalked up in the property boom just past.

The almost 14 per cent plunge is more than double the 6.1 per cent decline in the fourth quarter of last year and nearly triple the 4.7 per cent fall for the whole of last year, according to URA data.

Some property experts have described the fall as startling while others, such as Credo Real Estate managing director Karamjit Singh, said it was not unexpected.

He said sales were extremely weak in the fourth quarter following the Lehman Brothers collapse and that this followed into January, adding that ‘the index is playing catch-up - it has always lagged the market’.

Contrary to typical expectations that city-centre areas would suffer the largest price drop, yesterday’s data showed the biggest first-quarter price fall of 17.2 per cent hit non-landed homes in city-fringe areas.

Non-landed city-centre home prices fell 15.2 per cent while non-landed suburban home prices dipped 7.5 per cent, said the URA, which is set to give more details on the private home market on April 24.

So far, the mass market has been the most resilient of the three areas and will remain so, consultants said.

Many of the new private homes sold this year - some 2,000 units or more are expected to be sold for the first quarter, compared with 4,264 units during the whole of last year - were mass-market units. High-end home deals have been few and far between. If volumes rise due to more distressed sales, the price drop may be more pronounced, experts warned.

Prices also fell in the HDB resale market - for the first time since 2006 - albeit by just 0.6 per cent.

‘While the fall in price of private residential properties in the first quarter was acute, the drab economic situation is expected to continue to place downward pressure on home prices in 2009,’ said Knight Frank’s director of research and consultancy Nicholas Mak.

But the fall may not be so sharp going forward. Developers have already made a ‘quantum leap’ in reducing prices during the first three months of the year, said Colliers International’s director for research and advisory Tay Huey Ying.

‘Although further declines in launch prices can be expected, the incremental drop is likely to be marginal and more gradual.’

She expects the rate of decline to taper off to around 8 per cent for the second quarter, and 3 per cent to 5 per cent for the third and fourth quarters. Overall, she expects an average fall of 25 per cent to 30 per cent this year, with a milder drop of 10 per cent to 15 per cent for the mass market.

However, the continued decrease does not signal that the bottom is close at hand.

‘If it is going to be a deep and long recession, then the bottom of the market may not come in 2009,’ said Chesterton Suntec International’s head of research and consultancy Colin Tan.

Currently, all bets are out on whether the fall for this downward cycle will be deeper than expected though, according to Mr Singh, history shows that prices at the bottom of the present trough will be higher than those experienced at the lowest point of the previous downturn.

Source : Straits Times - 02 April 2009

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Obama, Hu pledge to work for world growth

Obama, Hu pledge to work for world growth

The two leaders promise to step up cooperation and resist protectionism

By Chua Chin Hon, US Bureau Chief

Police climbing over barriers after being overwhelmed by protesters outside the Bank of England in London yesterday, ahead of the Group of 20 summit. The protesters tried to storm the bank and pelted the police with eggs and fruit. — PHOTO: AGENCE FRANCE-PRESSE

THE United States and China yesterday pledged to step up cooperation to return the global economy to strong growth and prevent major financial crises from happening again.
US President Barack Obama and his Chinese counterpart Hu Jintao vowed to ‘resist protectionism and ensure sound and stable US-China trade relations’ in their first face-to-face meeting in London ahead of today’s Group of 20 summit.

A White House statement said both leaders ‘concluded that continued close cooperation between the US and China was critical at this time to maintain the health of the world economy and would remain so in the future’.

The official Xinhua news agency quoted Mr Hu telling Mr Obama: ‘Good relations with the US are not only in the interests of the two peoples, but also beneficial to peace, stability and prosperity of the Asia-Pacific region, and the world at large.’

Mr Obama also accepted an invitation from Mr Hu to visit China later this year.

There have been concerns that Beijing would retaliate against rising protectionist sentiments in Washington with measures of its own, potentially sparking a trade war between the two economic juggernauts.

But such messages of cooperation and goodwill were the order of the day instead as leaders of the world’s 20 biggest economies gathered in the British capital for a summit aimed at coming up with a coordinated response against the global financial crisis.

Their arrival was met by some 4,000 protesters, who clogged the streets of London’s financial district for what demonstrators branded as ‘Financial Fool’s Day’. Rioters clashed with riot police, breaking into the heavily guarded Royal Bank of Scotland and smashing its windows. Nearly two dozen people were arrested in multiple clashes.

A battered effigy of a banker in a bowler’s hat hung on a set of traffic lights near the Bank of England. Protesters also tried to storm the Bank of England and pelted police with eggs and fruit.

Behind closed doors, however, French President Nicolas Sarkozy said France and Germany rejected the current summit proposals on reforming the financial system and cracking down on tax havens and corporate bonuses. But other leaders played down Mr Sarkozy’s threat to walk out of the summit.

The meeting between Mr Obama and Mr Hu was watched particularly closely, given Beijing’s unusually public call to move away from the greenback as the global reserve currency and comments by its Prime Minister expressing worries about the safety of the mainland’s US$740 billion (S$1.12 trillion) holdings of US Treasury securities.

Neither the White House statement nor the Xinhua report made any direct mention of these prickly issues.

Mr Obama capped a busy day of international diplomacy with back-to-back meetings with the British Prime Minister Gordon Brown and Russian President Dmitriy Medvedev.

Washington, which wants to ‘reset’ its relations with Moscow, said in a joint statement that ‘the era when our countries viewed each other as enemies is long over…We are ready to move beyond Cold War mentalities and chart a fresh start in relations’.

In what could prove an early diplomatic breakthrough for the new US leader, Mr Obama and Mr Medvedev agreed to step up efforts to reduce their nuclear arsenals. A new treaty setting out the steps and goals for nuclear arms reduction could be ready as early as July

Source : Straits Times - 02 April 2009

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Office occupancy posts steepest fall since 1997

Office occupancy posts steepest fall since 1997

Rents set to slide further after 18% average islandwide drop in Q1

(SINGAPORE) The islandwide average office occupancy rate slid 2.1 percentage points quarter on quarter to 93.6 per cent in Q1 2009, according to DTZ. This is the steepest quarterly fall since Q3 1997, when a decline of 2.6 percentage points was recorded.

No lack of space: During the last office slump, shadow space also emerged, and according to CB Richard Ellis research reports, this amounted to more than one million sq ft at end-2002
The average office occupancy rate at Raffles Place was 92.9 per cent at end-Q1 2009, translating to the greatest quarterly decline of 2.7 percentage points since Q4 2004 when the occupancy rate fell 2.8 percentage points, DTZ said.

‘Office occupancies in Anson Road/Tanjong Pagar and decentralised areas suffered even larger declines of 3.6 percentage points to 93.7 per cent and three percentage points to 95.2 per cent respectively, due partly to the completion of Murray Terrace and two transitional office projects - 11 Tampines Concourse and Mountbatten Square,’ the property consultancy group said yesterday. Office vacancies are expected to rise further and rents will slide.

DTZ executive director Ong Choon Fah said: ‘Office demand has almost collapsed. Substantial new supply is starting to come on stream from this year, followed by more supply next year and in 2011. In addition, there is competition from shadow space.’

Shadow space refers to excess space that companies try to sub-let. There was at least 106,000 sq ft of such space available for leasing in Q1, according to DTZ. ‘This constituted only 2.9 per cent of the total vacant office space, but is expected to grow in the next few quarters as more companies are likely to return excess space to the secondary market through cost-cutting measures,’ DTZ said. ‘In addition, some companies which have pre-leased space in new projects completing within these two years are likely to sub-lease excess space as they further streamline business operations and intensify space usage.’

BT understands that Macquarie is prepared to sub-let some of the space it has signed up for at Marina Bay Financial Centre’s (MBFC) Tower 2 under the project’s first phase, which is slated to be ready in Q2 2010. Macquarie has taken more than 74,000 sq ft on levels 16 to 18 of the tower.

Market watchers said they would not be surprised if DBS Group too tries to sub-let part of the 700,000 sq ft it has leased at MBFC’s Tower 3, in the project’s second phase, given that it axed some 900 staff in November.

Elsewhere in Singapore, Citibank is said to be offering over 100,000 sq ft of shadow space at various locations, including Capital Square, Marsh & McLennan Centre and Millenia Tower.

DTZ executive director Angela Tan said: ‘Shadow space, which usually comes with existing fit-outs and shorter lease terms, allows tenants to save on initial set-up costs and provides flexibility.’

Shadow space also emerged during the last office slump. According to CB Richard Ellis research reports, this amounted to more than one million sq ft at end-2002.

DTZ said the fall in office rents gathered momentum in Q1 2009, with an average decline of 18 per cent from the preceding quarter across the island. Prime office rents in Raffles Place dived 25 per cent quarter on quarter to an average of $12 psf per month in Q1.

Average office rents in Tampines Finance Park fell the most, easing 32 per cent to $5 psf per month amid an increase in supply emanating from the newly completed 11 Tampines Concourse and the availability of shadow space at Tampines Plaza.

Source : Business Times - 02 April 2009

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Singapore Private home prices take double-digit dive

Singapore Private home prices take double-digit dive

Even gravity-defying HDB resale prices show signs of cracking in Q1 with 0.6% slide

By UMA SHANKARI

(SINGAPORE) Private home prices plunged 13.8 per cent in the first three months of this year - a record quarterly drop as developers and other market players slashed their expectations.

It was the third quarterly fall in prices - and much steeper than the 6.1 per cent drop in the preceding Q4 2008, according to advance estimates released by the Urban Redevelopment Authority (URA) yesterday. Private home prices dipped 1.8 per cent in Q3 2008 after 17 straight quarters of growth.

Prices of resale HDB flats, which seemed to defy gravity and grew throughout 2008, also fell in Q1 2009 - by 0.6 per cent - after nine quarters of growth.

Analysts were expecting a significant drop in private home prices, but the actual fall was bigger than thought. In recent months, developers have cut the selling prices of new homes and sellers of secondary properties have also trimmed their asking prices.

‘The fall is not surprising as a lot of developers have reduced prices to move new units, and in the resale market, people are now asking for more reasonable prices,’ said DTZ’s senior director Chua Chor Hoon.

DMG & Partners Securities’ analyst Brandon Lee said that new projects and units in previously launched but unsold projects, were being launched or relaunched at 10-30 per cent discounts to the original intended selling prices. Also, there were distressed sales in the secondary market.

Aggressive price cutting by developers seems to have paid off. An estimated 2,100-plus new homes were sold in Q1 - the highest level since the market was hit by the US mortgage crisis in the last quarter of 2007 and more than four times the number of new units sold in Q4 2008. But the pick-up in sales volume was at the expense of prices.

URA’s non-landed private home price index for the Core Central Region, which includes the prime districts, financial district and Sentosa Cove, fell 15.2 per cent quarter-on-quarter in Q1. In the Rest of Central Region, prices fell 17.2 per cent. And in the Outside Central Region, which is a proxy for suburban mass-market locations, they fell 7.5 per cent.

The drop in HDB resale prices took some observers by surprise, as analysts tracking the sector had said that they would continue to rise in the first half of this year, though at a slower pace than in 2008.

‘HDB resale prices increased some 32 per cent since Q1 2007 before reaching a new peak in Q4 2008,’ said ERA Asia-Pacific associate director Eugene Lim. The marginal decrease in Q1 shows HDB resale prices are now moving in tandem with the deteriorating economic and unemployment conditions.

Analysts said that the main cause of the fall in HDB’s resale index is the lower cash-over-valuation (COV) amounts that buyers are now willing to pay. ‘The slight dip is probably due to more buyers of HDB flats being resistant to paying high levels of COV,’ said PropNex chief executive Mohamed Ismail. ‘While demand for HDB resale flats is evidently still strong, sellers in this economic climate are realising the weaker buying power of consumers.’

Private home prices are expected to continue falling in the rest of the year. ‘While the fall in prices of private residential properties in the first quarter was acute, the drab economic situation is expected to continue to place downward pressure on home prices in 2009,’ said Nicholas Mak, director of research and consultancy at Knight Frank.

But the pace of decline is expected to taper off. ‘Developers have already made a quantum leap in reducing prices in Q1 2009 and although further declines in launch prices can be expected, the incremental drop is likely to be marginal and more gradual,’ said Tay Huey Ying, director for research and advisory at Colliers International. Ms Tay expects the rate of decline in the URA price index to taper off to about 8 per cent in Q2 2009 and then 3-5 per cent for each of the subsequent two quarters.

For the full year, analysts put the overall drop in private home prices at 20-30 per cent, with homes in the suburban areas taking the smallest hit.

The fall in HDB prices, on the other hand, is expected to pick up steam in the rest of 2009. Analysts expect that HDB resale prices will fall by between 5 and 15 per cent for the whole of 2009.

Source : Business Times - 02 April 2009

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