HDB resale prices have gone up by a better-than-expected 17.5 per cent in 2007, the fastest rate since prices soared by 25 per cent in 1996, latest official figures by the Housing Development Board (HDB) showed.
Most homes in Singapore have appreciated to the highest levels since 1996. The price of a three-room HDB flat was an average of S$149,000 in the last quarter while a five-room flat in Marine Parade fetches an average of S$598,000. Islandwide, the median price for an HDB flat was S$340,000.
Cash above valuation has also risen to an average of S$22,000, up from S$17,000 in the third quarter.
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Knight Frank's director for consultancy and research Nicholas Mak said, "It basically means that transacted prices are actually growing at a faster rate than the valuation. The effect can be quite positive for the private property market because it means that sellers of HDB flats will have more cash in hand for the down payment of their purchases of private properties. So that could lead to an increase in the demand for private properties."
Rental prices have also gone up by S$100 a month for flats with four rooms or more. For instance, executive flats in Bishan are being let out for as much as S$2,200 a month.
Analysts said this is clearly a spillover-effect from the private property market.
Rents of private homes went up by 41.2 per cent in 2007. The increase in rents and sales prices, however, slowed to 6.8 per cent in the last quarter.
"In terms of prices of private homes, we realised areas that actually had the best performance in the fourth quarter (was) actually the fringe areas – just outside the prime districts of 9, 10 and 11, such as District 5 and in the Tanjong Rhu area. The reason is... I think there are some buyers who find that prices in the prime districts (have) already gone to quite a high level and they're looking for homes that are near to the cities but just somewhere in the more-affordable areas."
Analysts agreed that sales price and rent increases of both HDB and private properties are likely to be more subdued in the first quarter of 2008.
Jones Lang LaSalle's head of research and consultancy Dr Chua Yang Liang said, "With the overhanging sub-prime issue that we're not certain at this moment, what the impact is, I think it'd be a more cautionary leasing market in 2008."
Prices of private properties went up by an expected 31.5 per cent last year. - CNA/ac
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