Despite the introduction of cooling measures announced on 30 August, the flash estimates released by HDB and URA for the third quarter of the year show a sustained demand for private and public housing.
The HDB resale price index (RPI) climbed a further 4.0 percent to another new high of 167.8 points, an increase that could be attributed to the continuing upward trend of median Cash-Over-Valuation (COV), said property agency PropNex Realty.
“Our transactions for 3Q10 saw median COV prices of $30,000, $32,000, $35,000 and $38,000 for three-room, four-room, five-room and executive flats respectively,” said Mr. Mohamed Ismail, chief executive of PropNex. “This is up from HDB’s 2Q10 figures by between 4 and 15 percent, with the largest increase being for 3-room flats. Our overall median COV recorded is about $31,000, a mere $1,000 more than HDB’s figure for 2Q10.”
The increase in Q3 2010 reflects a very strong demand for resale flats, said PropNex, which holds almost 20 percent of the HDB resale market share based on unique deals recorded in Q2.
Mr. Ismail, however, warned that the numbers are mainly based on figures for July and August, which is prior to HDB’s announcement of the new cooling measures. Thus, it cannot be concluded from HDB’s results for Q3 that the measures were ineffective.
“Since the measures were announced, we have seen COV levels drop by 20 to 30 percent, based on our most recent transactions. Following the impact of the new measures, which caught many potential buyers by surprise with its immediate effect, the demand for resale flats has wavered and dipped. Our number of unique transactions for 3Q10 show a 35 percent drop in the sales volume from 2Q10.”
Mr. Ismail pointed out that HDB’s actual figures for Q3 will not reflect this level of reduction, since PropNex records a deal upon an agent’s submission after the Option has been exercised. HDB, on the other hand, records a deal after the completion of the sale, which could take 16 weeks after the Option has been exercised.
Meanwhile, for the price index flash estimate for private properties released by URA, Mr. Ismail noted that its steady growth from Q1 to Q2 has been continuously maintained, with an overall growth of 3.1 percent to 190.0 points.