The booming property market shows no sign of letting up. Third-quarter prices indicate an upward climb across the private residential market and HDB resale segment.In particular, HDB resale prices rose 6.6 percent over the previous quarter - the highest increase in 10 years.
Buying a home in the resale market will not come cheap.
The latest data showed a 6.6 percent rise in prices across most flat types and towns.
However, housing agents said prices in some areas are rising at an alarming rate.
Mohamed Ismail, CEO, PropNex, said, "Though the overall price index says it's 6.6 per cent, but some of the locations, particularly if you look at say five-room flats in places like Ang Mo Kio or Jurong East, Bedok and as well as in Queenstown, all have recorded a median price increase of more than 10 percent, with Queenstown recording a 20 percent increase for a five-room flat."
Overall, the resale transaction volume fell 11 percent in the third quarter.
Industry watchers said this could be due to the surge in prices in the second quarter, which may have caused younger buyers to shy away.
Another thing working against younger home buyers is the climbing cash over valuation (COV) amount.
Latest figures showed the median COV for all resale transactions in third quarter was S$17,000.
However, agents said the COV for central areas has risen to an unrealistic level - at some S$100,000 above valuation for a five-room and executive flat in Queenstown.
Still, they do not expect the upward trend to last.
Eugene Lim, Associate Director, ERA, said, "Many sellers are asking for higher and higher cash over valuation and if you look at what is happening in the market, we are actually beginning to see some resistance, because a typical HDB buyer does not have so much cash or is not willing to part with so much cash, and this will put a cap basically on how prices increase over time."
The resale sector is expected to finish strongly in the next quarter, with agents forecasting a 5 to 6 percent rise in prices.
They also project total resale prices to increase between 13 and 17 percent for the year.
Industry players said the government's plan to build more new flats over the next six months will ease pressure on resale prices in the long run, and they do not expect resale prices to have a big impact on the prices HDB will charge for its new flats.
However, property agents said the prices will be competitive in popular locations.
They said the high demand for HDB resale flats came partly from buyers who have been priced out of private residential properties.
In addition, the rosy economic outlook also caused many home owners to upgrade to a larger flat.
As for the HDB rental market, industry players said the 8 percent rise in the third quarter is backed by strong demand and a spillover effect from the private property sector.
Another increase of 5 to 10 percent is expected next quarter.
For private residential properties, prices rose 8.3 percent - the same rate of increase as the second quarter.
Rentals also scaled up 11.4 percent, compared to 10.4 percent previously. - By Wong Siew Ying,CNA/ms
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