BTO bumper supply takes toll on resale flats

PropertyGuru

3 April 2012 at 1:52 am

With the government rolling out more housing choices for buyers under the BTO (Build-to-Order) scheme, signs of fatigue are slowly creeping into the HDB resale market, according to a report by The Business Times.

In the last quarter, the housing board released a total of 8,706 BTO flats into the market, aside from the 3,825 flats offered under the SBF (Sale of Balance Flats) exercise.

That number may grow to 25,000 units by year-end, according to the HDB.

At the same time, the large BTO supply is said to have affected the resale market, taking into account HDB's flash estimate of the RPI (Resale Price Index) in Q1, which rose by just 0.6 percent, compared to the 1.7 percent increase seen in Q4 2011.

"Resale prices are stabilising and cash-over-valuation (COV) is coming down. The main reasons are that prices have hit a ceiling and home buyers are attracted by HDB's continued BTO launches of a variety of flats in a variety of locations," said Eugene Lim, Key Executive Officer at ERA Realty.

Lim added that the recent policy change of setting aside 15 percent of BTO flats in non-mature estates for second-timers has also moved buyers away from the resale market.

In general, Q1 resale transaction volumes have noticeably dropped, with five-room units and executive flats the most affected. Related Stories:HDB applications exceed available flats

1-year ban for cancelling HDB bookings

HDB's bumper supply to meet diverse needs

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