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Singapore. Property agency bosses are predicting a 3 to 5 percent fall in the prices of resale Housing Board apartments.

This correction could even hit 10 percent if the euro zone crisis worsens and Singapore’s economy is affected, said the heads of major local agencies at a conference on Wednesday.

HDB resale unit prices have enjoyed a largely uninterrupted bull run in the past five years, rising a stunning 84 percent.

The only blip was in the first quarter of 2009, in the aftermath of the 2008 financial crisis, when prices dipped a marginal 0.8 percent before climbing again.

Bosses of firms such as PropNex, Dennis Wee Group, ERA Realty, HSR Property Group, C&H Properties and DTZ — which together account for almost all HDB resale transactions — point to a combination of dampened demand in the resale market and a record supply of new HDB flats as key factors.

They were speaking at the inaugural Singapore Property Analytics Conference at the Toa Payoh HDB Hub, organized by Singapore Real Estate Exchange (SRX), a consortium of the country’s leading property agencies.

During a discussion, PropNex chief executive Mohamed Ismail said: “The HDB resale market has been due for a correction for some time now and we are likely to see it happening this year.”

But the analysts were quick to add that there would not be a price crash, citing strong fundamentals in the market.

In the short term, however, there are a few reasons why prices would come under pressure. Foreigner numbers entering Singapore, for example, are falling. This group typically contributes to strong demand for HDB rental and resale flats.

C&H Properties key executive officer Albert Lu noted that the number of new permanent residents and citizens in 2010 had dropped significantly compared with previous years, even as the HDB had ramped up the supply of new build-to-order (BTO) flats which had been priced “very attractively.”

HDB offered 28,000 flats last year, and is set to offer 25,000 new BTO units this year. The launch of 50,000 apartments in just two years is something HDB has not done in the past 15 years, said Ismail.

And with the recent move to raise the household monthly income ceiling for new flats from $8,000 to $10,000, more buyers are flocking to the new flat market from the resale one, he said.

ERA Realty key executive officer Eugene Lim said that if HDB sets aside more new apartments for second-time home buyers, as it recently hinted it might do, then even more demand would migrate from the resale to the new apartment market.

Both ERA and PropNex told The Straits Times on the sidelines that based on last month’s transactions, the average cash premium paid to sellers above an apartment's valuation (known as cash-over- valuation, or COV) has been declining.

“In the past, the median COV was above $30,000 across the island; now it’s more at the $20,000 to $25,000 level,” said Ismail.

As for how much the market would eventually correct, HSR Property Group CEO Patrick Liew said the extent would depend on macroeconomic conditions — whether Singapore slips into a recession, and if the Government introduces further measures to cool the property market.

Wednesday’s conference was attended by about 500 people from the industry. The SRX, a local portal created by start-up StreetSine, collates and displays transactions by 11 property firms such as ERA, HSR and OrangeTee.

Reprinted courtesy of Straits Times Indonesia. To subscribe to Straits Times Indonesia and/or the Jakarta Globe call 021 2553 5055.