SINGAPORE — Prices of resale Housing and Development Board (HDB) flats fell 0.5 per cent last month from December in the first drop in seven months, flash estimates from SRX Property showed today (Feb 4), but analysts shrugged it off as a normal price fluctuation and said the market is likely to stabilise at current levels.

“We should continue to see recurring monthly price movements of about 0.5 per cent, either upwards or downwards. These are month-on-month fluctuations and they should not be a cause for concern,” said Mr Eugene Lim, key executive officer at property agency ERA.

“In 2016, the HDB resale market should generally see stable prices. With HDB’s official transaction data often used as the basis for the negotiation of the sale price nowadays, prices rarely differ much from those of ­recently transacted comparable units. This, in turn, contributes to the increased price stability in the HDB market,” he added.

Based on the SRX report, 1,286 HDB resale flats were sold last month, an 8.6 per cent decrease from the 1,407 units in December. Mr Chris Koh, director of property firm Chris International, said transaction volumes and prices are historically lowest at the end of the year and the beginning of the year, especially as “activity comes down” due to the reopening of school and the upcoming festive seasons.

PropNex Realty CEO Ismail Gafoor said: “It is not surprising for both transactions and prices to be lukewarm in the months of January and February. Most buyers and sellers would be focusing on their work and/or their children as they begin their school terms. February will also likely follow a similar trend due to the Chinese New Year holidays.” 

Year-on-year, prices have fallen by 1.3 per cent from January 2015 while resale volume increased by 2.6 per cent, the SRX data showed. From their peak in April 2013, the HDB resale market has declined by 11.1 per cent. 

HDB resale prices have been tempered by a “potent combination of cooling measures”, said Mr Ismail. These include the reduction of the Mortgage Servicing Ratio cap to 30 per cent, the three-year waiting 
period for new Permanent Residents before they can buy resale flats, as well as the reduction of the maximum loan terms for HDB loans to 25 years and bank loans to 30 years. Allowing singles to buy two-room Build-to-Order (BTO) flats in non-mature estates also removed some demand from the resale market.

Looking ahead, Mr Ismail said HDB resale prices are “going through a period of consolidation with marginal price movements as compared to the previous two years”.

While the steady supply of BTO flats being introduced could weigh on the resale market, the coming year might “spring a surprise” as the current price points would “entice more buyers to 
enter the market”, such as young couples and upgraders, he added.

“The HDB resale price movement may be between plus 1 per cent to minus 2 per cent for 2016,” he forecast.