Revised HDB Resale Price Index
Revised HDB Resale Price Index (RPI) was announced on 9 December 2014 which will impact on the 4th quarter RPI result of 2014. Since the last revision in 2002, the variety of resale flats in terms of design, age, location has increased but such factors were not taken into consideration as the Resale Price Index (RPI) provides the general price trend of resale HDB flats.
HDB has updated the computation methodology of the RPI by:
i) Adopting the Stratified Hedonic Regression Method;
ii) Switching to 5-quarter fixed weights; and
iii) Adopting a new base period of 1Q2009.
While only the statisticians may know exactly what changes have made to compute the revised HDB resale price index, it is not difficult for normal layman and property investors to notice that the recent decline in HDB resale price index under the revised computation is much sharper than it was before. This is a clearer and obvious downtrend which reinforces the perception of the current property market situation of the Singapore public housing as well as the private property market.
HDB Resale Price Index – Trending Down in 7 Consecutive Quarters from Q2 – 2013 Peak.
Source : HDB
From the above table (dated on 15 April 2015), we could see that the trending of HDB Resale Price Index is down in 7 consecutive quarters from the Q2 2013 Peak by a percentage of 9.2%. This trending down may persist until end of 2016. Year 2017 will be the crucial year to look forward when the huge number of public housing units and private units are completed and such supply may exceed the local demand.
The time of Cash over valuation has gone. Likely that the resale price index will be trending down further under the existing cooling measures to prevent public outcry over unrealistically high HDB resale price. To certain extent, i do agree we should keep the local public housing affordable especially for young couples and elderly. From another blog, it was noted that a HDB flat at Bishan Street 13 was transacted at a record price of $1.05 million. This unrealistic sky price price for HDB resale flat should be controlled. I can’t imagine my two kids who may be buying a decent flat that costs over a million after another two decades when they start a family themselves.