Rebound in resale flats shows stability, says Mah

Source : Business Times – 9 Jul 2009

URA data shows Q2 resale price index rising 1.2%, against dip of 0.8% in Q1

THE slight rebound in HDB resale flat prices indicates a stable, not a rising, market, said Minister for National Development Mah Bow Tan yesterday.

Flash estimates from the Urban Redevelopment Authority (URA) had shown that the HDB resale price index rose 1.2 per cent in the second quarter, against a 0.8 per cent dip in the first quarter – suggesting a recovery in the sector.

Speaking at the unveiling of City Development Limited’s Tampines Concourse, Mr Mah said: ‘Well, I don’t know whether you could use the word rising – it’s only one per cent. It was minus less than one per cent in the previous quarter, it’s now plus one per cent. I would say it is stable, I wouldn’t call it rising.’

Noting that the HDB market is a very large one, he feels that price fluctuations within a range of one per cent is stable.

Looking ahead, Mr Mah also revealed that ‘8,000 or more’ new HDB flats may be launched this year, depending on the demand. However, not all the demand for public housing will be met by new flats.

Cautioning against an oversupply, Mr Mah said: ‘We cannot be building new flats to cater to every last person who wants a new flat. Because, if you do that, then obviously, you are overbuilding. So some of the demand will have to be made with resale flats.’

Oversupply of new flats may depress resale flat prices, leaving existing homeowners worse off and new homeowners feeling like they have overpaid for their flats. Thus, the supply of new HDB flats should be carefully calibrated to ‘cater to some of the new demand (for flats) but not all’, with an emphasis on maintaining price stability.

As for keeping public housing affordable, the minister said that the monthly instalments for new and resale HDB flats, as well as household incomes, are closely monitored to ensure that public housing remains affordable for the masses.