Housing & Development Board (HDB) resale flat prices dipped 0.6 per cent in the first quarter of 2017 from the previous quarter, according to flash estimates out on Monday.
While this was by no means a significant decline, it surprised several property consultants who were expecting the data to show the market in consolidation mode.
The slight dip in prices came after five preceding quarters of negligible price movements; it was also the highest price drop in the last seven quarters, mainly because the rate of price decline has started to significantly slow since the start of Q1 2015.
Most of the consultants explained the latest price decline as the first quarter of the year being traditionally quieter due to the Chinese New Year holidays and February being a shorter month.
Such a price decline can also be attributed to the steady supply of the HDB build-to-order (BTO) flats expected in 2017.
Flat sellers could also have opted to accept a larger price cut to quickly offload their unsold flat, so that they can move into their newly completed BTO flat or executive condominium.
The 0.6 per cent price drop divided the consultants into two groups: those who believe that the larger-than-expected decline was just a blip, and prices would continue to stabilise; and those who read it as a sign that prices may further weaken, even if just slightly.
Those in the first group cite factors such as the higher housing grants for the purchase of resale public housing announced in this year's budget that would help support market demand.
ERA Realty key executive officer Eugene Lim said: "We are still optimistic that the HDB resale market has largely stabilised. Based on ERA's transactions, which account for some 45 per cent of market share, the number of resale HDB transactions has picked up in March and prices are largely well supported by valuation.
"Recently, with the announcement that first timers will receive increased CPF grants for resale flats, we are expecting the resale market to see increased interest from this group as they utilise the grants to purchase a more affordable resale flat."
He added that with HDB slightly reducing the number of BTO flat supply to about 17,000 units in 2017, from 17,891 in 2016, this may also have the slight effect of pushing more first-timers towards the resale market for their first flat.
"We are expecting the HDB resale transaction volume to increase to about 22,000 to 23,000 units in 2017, with prices edging up slightly by 0.1-0.5 per cent for the full year."
Others are expecting to see flattish price movement of about negative two to one per cent in 2017, with volume exceeding 22,000 units due to lower asking prices.
Data for the full quarter will be released on April 28.
Adapted from: The Business Times, 4 April 2017