New compass in a buyers' market
HOME buyers are paying less than the projected market prices for their Housing Board properties, according to a newly launched property price index that also shows a buyers' market over the next few months.
Called Transaction Over X-Value (TOX), the new pricing index by the Singapore Real Estate Exchange (SRX) showed that buyers forked out about $3,000 less than estimated median market values across the HDB resale market last month
And more will continue to pay below recent transaction prices in the short term, said SRX co-founder Jeremy Lee, with a pending supply glut due to 6,000 HDB upgraders who are getting new Build-To-Order (BTO) flats.
He said: "Downward pressure on prices will persist for the rest of the year, until the demand-supply equilibrium is restored."
SRX's flash figures showed that last month's HDB resale prices inched up only slightly by 0.3 per cent from the previous month.
Prices for three- and four-room flats rose by 0.5 per cent and 0.8 per cent respectively, while those of five-room and executive flats dipped by 0.2 and 0.7 per cent respectively.
Noting that buyers now can use only up to 30 per cent of their monthly income to service an HDB loan, Mr Lee explained that "bigger units face more challenges in today's market".
More flats changed hands last month, with 1,319 flats sold - about 40 per cent more than the 951 units sold in February - a six-month record high.
Mr Lee said that the new TOX index functions as a "forward indicator on how heated the market is", which is similar to the now-defunct cash-over-valuation (COV).
The Government scrapped COV last month, so buyers and sellers of resale flats now have to agree upon a price first before the buyer can get an official valuation for a bank loan.
The launch of the TOX index follows the roll-out of X-Value, a property pricing tool which provides approximate market values based on recent transactions.
Since its launch on March 20, more than 60,000 requests for X-Value have been made.
OrangeTee managing director Steven Lee pointed out that the new index can help establish "relevant prices that are true to perceived market values".
adding that the index will not destabilise the market.
Mr Nicholas Mak, executive director of research and consultancy at SLP International, said: "To use the TOX to their advantage, both seller and buyer will still have to come to the negotiation table with a valuation report.
"Otherwise, it is just a number up in the air."