With 80 percent of the population in Singapore residing in HDB units, it is expected that the present unemployment and recession situation can significantly affect the HDB market. However, the current crisis seems not to harm the primary and the secondary HDM market.

The HDB resale prices increased in 2007 by 17.5 percent and in 2008 by 14.5 percent from the 2 percent rise in 2006. Based on the figures of the HDB, the market has quickly recovered in the second quarter of 2009 by 1.4 percent to a new peak of 140.2 points, although the HDB resale prices encounter in the first quarter of the year a minor drop of 0.8 percent. The resale prices have increased 38 percent over the last three-and-a-half years.

With 2.4 percent higher increase in the present resale prices of HDB flats compared to the peak in the fourth quarter of 1996, HDB homeowners who has purchased their units during those periods can actually earn more than what they have paid should they decide to put their flats on sale. Based on the second quarter data, price increase has tapered off to as low as 1.4 percent compared to 4 percent average quarterly increase in 2007 and 2008.

However, the rush in resale transactions of HDB flats, which has started in the second quarter of the year, has continued until the third quarter. The transactions made by the agents of ERA show 3 percent gain in the resale prices in the third quarter.

From the market peak in the fourth quarter of 2007, the average Cash-Over-Valuation (COV) for all types of flat has glided along with the weakening condition of the economy. As shown on the HDB statistics, the average COV for executive, 5-room, 4-room and 3-room flats have slid to $0 for executive and 5-room flats; and $5,000 for 4-room and 3-room flats in the second quarter of 2009 from $33,500 for executive flats, $26,000 for 5-room, $22,000 for 4-room and $18,900 for 3-room flat in the last quarter of 2007.

However, the rush in resale transactions in the second and third quarter has brought the average COV for all types of flat to five-digits again in August and July. The resale transactions of ERA show that in August, the average COV has reached to $19,000 for the 3-room flats and up to $20,000 for the larger types of flat.

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