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Wednesday, July 6, 2011

Strong demand drives up HDB flat prices

SINGAPORE: Housing Development Board (HDB) flat prices in the second quarter rose at their fastest pace since the third quarter of last year.

According to preliminary estimates, the Housing Board resale price index in the second quarter rose 2.9% to a fresh record from the previous quarter.

Resale flat prices in the first three months of the year rose 1.6% in comparison. Prices of private homes, on the other hand, increased at a slower pace in the second quarter.

The 1.9% gain in the private residential property price index is the seventh consecutive quarter in which the rate of increase has fallen. The data is mostly based on transaction prices in caveats lodged during the first 10 weeks of the quarter.

Taken together, the emerging picture is that of home buyers flocking to buy HDB flats and shunning pricier private homes.

A recent report by Goldman Sachs showed that the price gap between mass market private homes and HDB flats has widened to a record making it harder than ever for aspiring HDB upgraders to buy a private home.

Analysts noted that HDB flats remained affordable despite public housing prices showing a sharper rise compared with private housing.

“This is because private property prices, in particular mass market condo prices, have increased beyond the reach of many HDB dwellers who had intended to upgrade,” said ERA Realty key executive Eugene Lim.

Four rounds of cooling measures since September 2009 including lowering the loan quantum to 60% for borrowers with more than one outstanding housing loan and uncertainties in the global economy have done much to keep a lid on price increases for private homes.

But it is a different story for HDB flats.

First timers, HDB upgraders, private property owners who downgraded to public housing and permanent residents have stoked demand for HDB flats.

Although HDB has rolled out new build-to-order flats in record numbers about 25,000 new flats will be offered for sale this year the fresh supply will take time to filter down to the market.

By The Straits Times

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