Public housing sees filter-down effect from private property market
SHAKING off years of stagnation, the HDB market gained momentum in the second quarter of 2007, as it saw a 'filter-down' effect from the red-hot private property market.
Data released by the Housing Board yesterday showed that the number of HDB resale transactions in the second quarter climbed to 8,700 - up from the 6,300 in the first three months of the year.
HDB's resale price index also rose at a relatively faster clip from April to June, climbing some 3 per cent - up from 1.3 per cent in the first quarter. The index was boosted by the majority of flats fetching more than their market valuations.
As much as 70 per cent of all resale HDB flats fetched more than their valuations in the second quarter, HDB said. The overall median cash-over-valuation (COV) was about $7,000. Analysts said that all the signs are pointing towards a recovery in the HDB market.
'Some 70 per cent of flats are selling above valuation - it seems that the market is seeing an upswing,' said Eugene Lim, ERA assistant vice-president.
PropNex chief executive Mohamed Ismail welcomed the 'modest' increase as the HDB market has been lagging behind the private property market for the last few quarters. 'The current price index (108.0 points) is no match for the peak in 1996 (136.9 points), but is good news for most HDB owners,' he said.
Market watchers said that the increase in HDB resale prices was largely expected as the market is seeing a 'filter-down' effect caused by rapidly rising private home prices.
'Home buyers who are priced out of the private property market will be looking at the larger flat types like the 5-room and executive flats,' said ERA's Mr Lim.
'They, in turn, will push those who are priced out of buying larger flats into buying smaller flats like the 4-room units.'
Official data shows that private home prices have climbed 13.5 per cent since the start of the year. Property analysts said that one reason for the heightened demand is the recent slew of en bloc sales in the private property market.
En bloc sellers have been snapping up HDB flats as replacement private homes get more expensive.
HDB's data identified Bishan, Bukit Merah, Bukit Timah and Marine Parade as four HDB resale 'hot spots' where buyers are willing to fork out significantly more COV for their flats.
These areas, which are closer to town, might be more popular with en bloc sellers used to living near the city centre, analysts said.
With the release of the new data yesterday, the Housing Board also upped the ante by giving median rental figures for HDB flats for the first time ever.
The data was released to counter recent reports that certain flats were being sub-let at very high rents. Such cases, HDB said, were very few and confined to flats with 'special attributes'. While HDB flat rentals have risen, they remain affordable in most cases, data shows.
Median rents range from $1,000 to $1,400 for a 4-room flat and $1,100 to $1,500 for a 5-room unit. Executive flats are going for anywhere between $1,100 and $1,900.
More HDB homeowners have jumped on the sub-letting bandwagon. The number of sub-letting approvals climbed to 3,600 in the second quarter, from 2,400 in the first quarter.
For the full year, HDB resale prices could climb by 8-10 per cent, analysts said. Resale volume for the whole year is expected to come to 30,000-33,000.
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