THE number of HDB resale transactions dipped sharply in the first quarter of this year, even as the price index continued to edge up, data released yesterday by HDB shows.
And market watchers said that although transactions can be expected to pick up over the next few quarters, the market is likely to remain lacklustre for one or two years.
In the first three months of this year, the number of HDB resale transactions was the lowest since Q1 2004. Just 6,258 units were sold in January-March 2007 - down 11.1 per cent from 7,039 a year earlier. And down a bigger 20.2 per cent from Q4 2006. The HDB resale price index, on the other hand, continued its slow climb, increasing 1.3 per cent in Q1.
The low volume could be loan-related, says property firm ERA. Starting Jan 1, flat buyers who want an HDB loan to buy a resale flat had to get an HDB loan eligibility letter, while those taking bank loans have needed a letter of offer from a bank.
'Buyers and property agents were not used to this new procedure at first and the resulting confusion did slow the pace of resale transactions for the whole market,' said ERA assistant vice-president Eugene Lim.
But the market is now used to the change and volume has picked up, Mr Lim said. About half of the resale flats that ERA sold in Q1 were transacted in March, he said. ERA says it has 40 per cent of the HDB resale market.
Another factor that could have squeezed Q1 resale volume is keen competition, other property agents reckon. 'More people could be buying private property after selling their HDB flats, rather than just moving onto bigger HDB flats,' said PropNex chief executive Mohamed Ismail.
The resale market may also be facing competition from HDB's Build-To-Order programme and the Design, Build and Sell Scheme launched for private developers last year.
