I refer to the article “First annual fall in HDB resale prices since 2005” (Straits Times, Jan 25).
Resale prices fell for the first time in 8 years
HDB resale flat prices fell for the first time in eight years, sliding 0.6 per cent last year after a 6.6 per cent jump in 2012.
BTO prices pegged to resale prices?
We have been told for years that the prices of HDB BTO flats are pegged to resale flat prices, under the market subsidy pricing policy.
BTO prices have “stabilised”?
And then we were told that since the last elections in 2011, BTO prices have “stabilised” despite rising resale prices in the last 2 years’ plus, because of a change in pricing policy to make flats more affordable.
Have BTO prices fallen now that resale prices have fallen?
So, when I read the subject article that resale prices had fallen for the first time in 8 years, I was curious as to whether BTO prices had fallen too now, compared to ideally about a year ago.
The prices for Punggol Vue (standard flats) in the January 2014 launch are from $179,000 to $218,000 for 3-room flats.
2 years ago, in January 2012, the prices for Water Sunbeam (Punggol) (standard flats) BTO launch were from $152,000 to $196,000.
Cheapest 3-room increased 18%?
So, the cheapest 3-room BTO standard flat in Punggol increased by about 18% ($179,000 divided by $152,000) against a 6.0% increase in resale flat prices in the last 2 years.
Increased 3 times more relative to resale prices?
Why is it that at least from this example (I had to find BTOs standard flats in the same area in the last 2 years and there weren’t any others that I could find to match the areas in the 2014 January BTO launch) – the cheapest 3-room has gone up 3 times (18 divided by 6%) more in terms of the price increase relative to the resale price increase?
Also, since Punggol Vue has no 4 or 5-room flats – I am unable to do any analysis with the 4 and 5-room flats in the Waterway Sunbeam BTO in January 2012.
4-room increased by 12.5% in 6 months?
However, there was a Punggol Opal in July 2012 which had 4-room flats (standard flats) from $289,000 to $341,000.
In contrast, 4-room flats in Waterway Sunbeam 4-room flats were priced from $257,000 to $333,000 in January 2012.
This means that the cheapest 4-room standard flat in Punggol increased by 12.5% in just 6 months from January to July 2012.
4-room increased by 4 times more than resale price increase?
Since resale prices rose by 6.6% in the whole year of 2012, why is it that the cheapest flat increased by almost 4 times the rate of increase (12.5% divided by 6.6 times 2) in the 6 months?
BTO prices “stabilised”?
Is this what we call BTO “prices have stabilised”?
Leong Sze Hian
*Leong is the Past President of the Society of Financial Service Professionals, an alumnus of Harvard University, has authored 4 books, quoted over 1500 times in the media , has been host of a money radio show, a daily newspaper column, Wharton Fellow, SEACeM Fellow, columnist for Malaysiakini, executive producer of the movie Ilo Ilo (24 international awards). He has served as Honorary Consul of Jamaica and founding advisor to the Financial Planning Associations of Brunei and Indonesia. He has 3 Masters, 2 Bachelors and 13 professional qualifications.