Resale HDB flats hit a record high price fueled by demand from PRs

Despite the sluggish economy, the prices of resale HDB flats continue to rise, hitting a record high in the fourth quarter of last year.

Figures released by HDB show prices rose by 3.8 per cent in the fourth quarter and 8 per cent in all for the entire 2009. HDB flat prices have risen almost 40 per cent over the past three years.

The Resale Price Index (RPI) hit 150.7 in the fourth quarter, up from the third quarter’s 145.2 and far beyond the previous peak of 136.9 achieved in the fourth quarter of 1996.

According to property analysts, the sky-rocketing prices is due to demand outpacing supply, fueled particularly by PRs over-paying for resale flats in prime areas.

One Indonesian PR paid $653,000 for a 4-room resale flat in Queenstown when he could easily afford to buy a condominium.

Singapore PRs are allowed to purchase HDB flats in the open market and sell them for a hefty profit years later.

There is no minimum period of residency in Singapore before a foreigner can apply for PR or to buy a HDB flat.

The ruling party’s pro-foreigner policy, especially towards the PRs enable them to exploit loopholes in the system to their own benefits.

There are stories of PRs, especially Malaysians, who retire comfortably back to their homelands with a lump sum from the sale of their HDB flats in Singapore.

An earlier report by ERA Real Estate Agency reveals that 40 per cent of its buyers of resale HDB flats are PRs.

PropNex chief executive Mohamed Ismail said that permanent residents estimated that PRs made up 20 per cent of his agency’s total HDB sales.

The managing director of C&H Realty Albert Lu claimed that PRs account for as high as 50 per cent of all HDB resale transactions.

National Development Minister Mah Bow Tan told parliament lately that PRs are “under-represented” in the HDB resale market without substantiating his statements.

He subsequently admitted that he has been “caught off guard” by the relentless rise in the prices of HDB flats.

However, he was quick to reassure that HDB flats remain “affordable” to ordinary Singaporeans and it is a “good thing” that prices continue to rise as it “generates wealth” for Singaporeans.

As the prices of new HDB flats are pegged to that of resale flats, the prices of BTO flats have hit a record high as well.

A recently launched project at Queenstown fetched prices of over $500,000 and $600,000 for four and five room flats respectively.

One financial consultant warns that only couples who has a combined monthly income of more than $7,500 can consider buying these flats and even then, they will have to deplete their CPFs on top of forking out a few hundred dollars in cash just to finance the housing loan.

While public housing is being increasingly priced out of reach of Singaporeans especially the young, the Ministry is busy building low-cost public housing for the mainland Chinese in the Tianjin Eco-city, a joint project between the Singapore and Chinese governments.

SOURCE: Temasekreview.com