HDB bear market is more than 5 years already – due to ’99-year lease’ problem?

I refer to the article “HDB prices fall 0.2% from previous quarter; 3,800 BTO flats to be released in November” (Straits Times, Oct 1).

It states that “Housing Board resale prices fell 0.2 per cent for the third quarter from the previous quarter this year, according to the latest flash estimates released on Monday (Oct 1).

The resale price index (RPI) is estimated at 131.5 for the third quarter, which is also down nearly 1 per cent from 132.8 in the same quarter last year.”

The RPI has been in a bear market for more than 5 years, declining from 149.4 in 20132Q to 131.5 now. This is a decrease of 12%.

In contrast, the URA Private Property Price Index has increased by 9.1% in the last year from 136.6 in 2017 Q2 to 149 in 2018 Q2.

Why are they moving in opposite directions, when historically they may tend to move quite close in tandem most of the time?

So, to what extent is this due to the ‘HDB 99-year lease’ problem?

But, the HDB Resale Price Index is for all resale flats. What if we breakdown and get statistics on older vs younger flats?

Well, you can see from the chart below, that the price difference between more than and less than 60 years’ lease left 5-room flats in Toa Payoh is about 40 per cent ($420,000 (approximate) divided $680,000 (approximate))

So, as the RPI continues to decrease – instead of ‘propaganda’ in the media, or relying on ad-hoc price data from private sector property experts (the chart above), – the Government should start to provide regular data on the price gap between older and newer HDB flat types in the different housing estates.

After all, isn’t this arguably, in the public interest, and in line with the online falsehoods’ committee’s recommendation that the Government should give the reasons for decisions not to disclose information to the public, and to gain the trust of the public?

Leong Sze Hian