According to a report today by the Singapore Real Estate Exchange (SRX), the cash-over-valuation for HDB resale flats has dropped below $10,000 in November. We’re not going to bust out the “we told you so” chant, but it’s worth taking a chill pill and having a look at what’s going on and what this really means for you.
What’s Going On?
As we mentioned in an earlier article, the multiple cooling measures introduced by the government, including the new TDSR framework, restrictions on purchasing for PRs, as well as an influx of flats which we recently addressed as well, have all contributed to the falling resale prices.
We maintain that prices have probably not hit rock bottom yet, and the numbers may need to be taken in context, given that this is typically a lull period extending all the way up till Chinese New Year. According to SRX, there was an 11.5% decrease in flats that were re-sold in November as compared to October. What’s even more telling is that compared to a year ago, volumes dropped by 34%
Who Does This Affect?
Whilst investors may be starting to get their panties up in a bunch, owner-occupiers shouldn’t really be bothered by this news. This follows on from the main purpose of the government’s extensive cooling measures: to stop prices from reaching speculative heights and making homes affordable.
What is interesting to note is that the report highlights that rentals of private condominiums remained flat after three months of decline, and median rentals of HDB flats dropped by S$50 to S$2,350, which was the first dip since June 2012. While this may not be the time for landlords to be picky, maintaining that rental yield at existing rates is definitely a better option than looking to sell that flat now.
What Should You Do?
While it seems that both owner-occupiers and investors are basically going to have to sit tight for now, the waiting game for sellers may turn things around eventually. As property investor Albert An mentioned to us previously,
“Not many people are factoring in the holding power that sellers have. The sales volume is falling because many sellers can afford to take their flats off the market, and wait out the down period.
If enough of them do it, it can cause a supply issue among the population segments that still need resale flats. That can cause prices to rise again.”
We will definitely be following the developments on resale prices as we move into a new year, so stay tuned with us on Facebook as we go along with the ride! In the meantime, if you are looking buy a flat soon you should save yourself some headache and check out the latest home loan rates at MoneySmart.
Are you concerned with the falling resale prices? When do you think it will pick up? Share your thoughts with us here.
Thant Zin Myint,
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