But number of resales falls 11% in Q3 to 7,700
Housing and Development Board (HDB) flats are re-selling on the open market for a median of $17,000 above valuation. HDB said that 80 per cent of resale flats in Q3 required cash over valuation (COV).
Room to grow: Citigroup economist Chua Hak Bin said that upcoming supply of flats is just 3% of current stock, compared to more than 15% in the early 90s boomHDB only started to release data on COV recently - and in the previous quarter the median COV was just $7,000.
HDB's Resale Index Price Index also increased 6.6 per cent in Q3 - more than double the 3 per cent in the previous quarter.
But while the median COV increased 140 per cent in Q3, the number of resale transactions fell 11 per cent from 8,700 to 7,700.
In an analysis of HDB's data, real estate agency PropNex said that price increases were more significant in popular neighbourhoods.
Increases in the median prices of three-room flats in Ang Mo Kio (central), Bedok (east) and Queenstown (central) were 11.8, 6.4 and 5.6 per cent respectively. And for larger five-room flats they were higher at 13.1, 16 and 20.6 per cent respectively.
In Clementi, Bukit Timah and Toa Payoh, the median COV for executive flats hit $155,000, $137,500 and $127,00, but HDB said that the number of units transacted in this category was below 20 in these areas.
PropNex CEO Mohamed Ismail said that it was too early to tell if there was a meaningful correlation between rising resale prices and falling resale volume.
The 11 per cent drop in transactions is not significant because HDB records show transaction volume ranges between 6500 and 8000 in most quarters, he said.
According to him 'it may be too early to conclude from this dip that consumers are price-sensitive'.
But he warned: 'If the resale market does slow down, the mass market could be affected because potential HDB upgraders will not be able to sell their flats to upgrade.'
ERA Singapore assistant vice-president Eugene Lim said that prevailing prices were 'unrealistic' and added: 'HDB homebuyers are beginning to show some resistance and this could translate into lower resale volume.'
He also said that demand from private-sector downgraders for five-room and executive flats meant that sellers will continue to lift their asking prices for such flats. 'A market survey indicates that asking prices for these larger flat types may vary some $50,000 to $200,000 above valuation,' he said.
In the light of increased demand, HDB has ramped up its building programme. More than 26,700 flats are expected to be completed between 2007 and 2011.
In a Citigroup report, economist Chua Hak Bin noted that the 'previous surge in HDB construction units was blamed for the severity of the post-1996 housing slump'. But he added that future supply seems manageable.
For comparison, he highlighted the fact that during the early-1990s property boom more than 120,000 HDB flats were constructed from 1993 to 1997, representing more than 15 per cent of HDB housing stock. But upcoming supply of 26,764 flats represents only about 3 per cent of current HDB stock and is probably less than half of the upcoming supply of private residential units.
On the increase in COV, he said: 'The increase in cash over valuations probably reflects the spilling-over of steep price increases seen for private property to HDB.
'The discount to equivalent-size HDB apartments over private apartments has widened considerably over the past few years. Buyers are starting to take advantage of that wide discount.'
HDB has also revealed that the number of flats approved for sub-letting rose to about 16,000 in Q3 from about 14,600 in the previous quarter. And overall rents have increased about 20 per cent, except that for two-room flats, which increased about 10 per cent.
HDB said that if needed it has potential supply of 4,000 to 5,000 units that can be introduced into the market to bolster rental supply over the next three years.
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