Public housing upgraders made up two-thirds of private home buyers in the country in 2009.
However, they were notably out of the brisk action in Q1 2010, which saw around 4,000 private residential units snapped up – more than twice the 1,860 units sold in the previous quarter.
Several analysts said that the burden of servicing hefty mortgage loans and steeply rising prices are among the reasons that have withheld the interest of HDB dwellers in the private housing market.
HDB upgraders accounted for just 33.7 percent of private home buyers in the first three months of the year, a sharp drop from 63.7 percent in the same quarter in 2009, according to a report by CBRE.
Mr. G Rajan, a PropNex agent, said that the price gap between a private condo and a public flat was wide enough for home buyers to think twice about switching.
As bank loans are now permitted to cover only 80 percent of the sale price, down from the previous 90 percent, home buyers will need to shell out more cash as well.
Another factor for the weaker participation of HDB upgraders: Most launches in Q1 2010 were for up-market properties in prime districts, compared to the large volume of projects in the mass market segment that dominated launches in the same quarter last year.
According to CBRE, the influx of foreign buyers, who comprise 23.5 percent of new home buyers, support the sales of private homes in the first quarter.
Mr. Desmond Sim, associate director of research and consultancy at Jones Lang LaSalle, said that prices are expected to be close to its peak, when the URA releases its residential property price index this week.
“If the buying fever and price increase continue unabated or intensify, more government measures are likely to be introduced,” said Ms. Chua Chor Hoon, research head of DTZ in South-east Asia.
Mr. Colin Tan, head of research and consultancy at Chesterton Suntec International, said: “I don’t see why prices should come down on their own without any government intervention as there is more money to spend than apartments to sell.”
Mr. Nicholas Mak, a property lecturer from Ngee Ann Polytechnic, said that liquidity, coupled with a growing market confidence, continues to spur demand, as investors dive into the market expecting to gain from the price increases.
Some expect the market to soften and HDB upgraders to return in Q3 this year.
CBRE reckons that demand for new homes in Q2 will reach 3,000 and developers will snap up offerings under the Government Land Sales programme in order to replenish their landbanks. As such, home prices are likely to increase gradually.
DTZ Research expects prices to rise "moderately" by percent this year, noting that during the first quarter, prices of homes in landed estates surpassed the 2008 peak levels.
However, leasehold homes outside the prime districts have also seen the least price growth since they have passed the peak, and there is "more resistance" to higher prices in the mass market.