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29 Aug 2013

Shoebox units lift resale home prices
Slight increase in July expected as loan curbs drive home buyers to consider cheaper options, say experts

Source: Straits Times | Money
By Melissa Tan

PRIVATE home resale prices edged up last month largely on the back of a jump in shoebox unit prices.

Overall resale prices rose 0.2 per cent in July from the preceding month, according to flash Singapore Res...idential Price Index (SRPI) figures released yesterday.

It reversed a revised 0.1 per cent decline from May to June. The flash figure for June was a decline of 0.4 per cent.

Consultants yesterday said the slight increase in resale prices was within expectations, citing new home loan restrictions introduced in late June that made it harder for significantly indebted borrowers to take on a mortgage.

The loan curbs, under a total debt servicing ratio (TDSR) framework, have driven home buyers to consider cheaper options.

R'ST Research director Ong Kah Seng noted that resale properties usually cost about 20 per cent less than new units in a comparable location.

He added that buyers likely turned to the secondary market last month because of the dearth of new units on offer as developers held back launches in the wake of the TDSR.

"It is quite apparent over the first half of 2013 that in months when there were abundant choices in the primary market, that drew buyers away from the secondary market.

"Conversely, in the months when there were limited project launches, the secondary sale market tended to perform slightly better or maintain stability."

Developers sold only 481 new private homes last month, a striking 73 per cent below the 1,806 units shifted in June. This was out of a paltry 557 new units that were put on the market.

The increase in overall resale prices last month was mostly due to a 2 per cent month-on-month climb in resale prices of small units, those of 506 sq ft or less.

The increase came on the heels of a revised 0.5 per cent drop in small-unit resale prices in June from the preceding month.

Analysts said that this trend was in line with home buyers' shift to smaller homes with lower total quantum costs due to the TDSR.

Resale prices of non-central private homes excluding small units grew 0.3 per cent from June to July, after rising a revised 1 per cent from May to June.

However, resale prices in the city centre stayed flat last month after they fell 1.5 per cent in June from the preceding month.

Analysts said that the demand for mass-market resale homes could rise in coming months due to a new Housing Board policy announced earlier this week which says that newly minted permanent residents (PRs) have to wait three years before they can buy a HDB flat. PRs who can afford suburban mass-market condominium units may buy those on the resale market rather than wait for an HDB flat, they said.