HDB Prices Likely To Go Up As Unsold Flats Dwindle

Source : The Business Times, October 11, 2007

1,600 apply online for 489 flats offered in balloting/walk-in sale yesterday

THE number of unsold Housing and Development Board (HDB) flats is getting smaller, with prices expected to go up.

HDB put up 489 flats in the North and West zones for sale yesterday through its Bi-monthly Combined Balloting/Walk-in sale exercise, and at the end of the day, over 1,600 online applications had been received.

The number of flats offered, however, is significantly smaller than in previous sale exercises.

In April, 1,269 flats were offered in the North and West zones, with 1,172 sold, reflecting a take-up rate of 92 per cent.

In June, 992 flats in the North-east zone were offered and 892 were sold - a take-up rate of 97 per cent.

A spokesman for HDB said: 'HDB has managed to clear a significant part of its stock of unsold flats; fewer unsold flats are now avail- able for sale under HDB's Bi-monthly Combined Balloting/Walk-in sale exercises.'

HDB said that it would continue to inject the balance stock from the Built-to-Order (BTO) and Balloting Exercises, and make them available for sale under the bi-monthly sale exercises.

'However, the total flat supply offered under these exercises is not expected to number into the thousands as it did in the past, given the gradual reduction of the stock of unsold flats,' said HDB.

HDB would not say if prices have been increased but added: 'In pricing HDB flats, one major consideration is the affordability of flats. In addition,

HDB also takes into consideration factors such as changes in their market value, arising from factors such as buyer demand and prevailing conditions in the resale markets and, individual attributes of the flats.'

HDB also suggested that buyers look to the resale market, 'if they are unable to find a new flat that suits their needs and preferences'.

The backlog of unsold flats was estimated at 9,000 in 2006.

Propnex CEO Mohamed Ismail believes that this has dwindled to less than 2,000 units.

Interestingly, Mr Mohamed believes that the previous glut of unsold flats came about because the value of resale flats had dropped to below valuation in the last slump.

Resale prices have, however, been rising, with the latest resale price index registering an increase of 6.5 per cent in Q3 '07, quarter-on-quarter.

And ERA Singapore assistant vice-president Eugene Lim believes that the 'push down' effect from the private market could price some buyers out.

These price-sensitive buyers will have to wait for the supply of about 4,500 new HDB flats offered under the BTO system, or the 1,500 units through the Design Build Sell Scheme, over the next six months.

Still, Mr Lim does not believe that there is a supply crunch at the lower end of the property market. 'People are looking for value though,' he added.