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(SINGAPORE) The rise in private home prices could be pricing HDB upgraders out of the private residential market, market watchers say.

The percentage of caveats for private homes lodged by those with HDB addresses fell to 26 per cent in the third quarter of this year, the lowest quarterly share in 12 years, according to a report by estate agent DTZ Debenham Tie Leung.

DTZ executive director Ong Choon Fah says there could also be other reasons for HDB dwellers staying put. For one, the type of launch seen over the past year or so has been predominantly high-end, rather than in the mass-market segment that typically appeals to people thinking of upgrading from their HDB flats to their first private home. 'So as a result, HDB dwellers' share among buyers of private homes has fallen,' Mrs Ong says.

She also suggests the lower proportion of private home buyers coming from the ranks of HDB flat dwellers could be due to the 'Housing & Development Board offering a broader range of products as seen in the recent Design Build and Sell Scheme where the private sector designs and develops public housing flats for HDB'. This gives HDB dwellers the chance to upgrade within the public housing sector, Mrs Ong suggests.

She also notes that HDB dwellers tend to start jumping on the home buying bandwagon when they see mass-market private home prices shooting up, in fear of runaway prices.

'Right now, I guess they don't have this fear, which may account for the slowdown in buying.'

The number of private homes bought by those with HDB addresses fell 22 per cent quarter-on-quarter to 1,203 in Q3 this year, DTZ said in its report, which is based on caveats captured by the Urban Redevelopment Authority's Realis system. The 26 per cent share by HDB flat dwellers among private home buyers in Q3 this year is lower than the 32 per cent share recorded in the preceding quarter as well as the 36 per cent seen in Q3 last year.

The figure reached its highest, 80 per cent, in Q2 2002, when developers adopted a competitive pricing strategy to clear stocks in anticipation of a tightening in the limits on withdrawing CPF funds to spend on housing.

The period also saw various projects being released in suburban locations at price points which appealed to HDB dwellers - including developments such as Queens next to Queenstown MRT station, Rosewood in Woodlands, Waterina in the Guillemard area, The Jade in Bukit Batok and Country Park Condo in Bedok.

Another period when HDB dwellers accounted for a high proportion (63 per cent) of private home purchases was in Q4 1998, when developers were selling projects at rock-bottom prices as the property market plumbed its lowest point during the Asian financial crisis.

Giving a breakdown on Q3 2006 buying patterns, DTZ said that those living in HDB flats bought a total of 371 private apartments and condos from developers in Q3 this year, a decrease of 38 per cent from the preceding quarter.

This was partly due to a lack of affordably priced leasehold mass-market and freehold projects available in the primary market. Many HDB upgraders turned to the secondary market, where in the third quarter 680 HDB residents bought private apartments - a figure which was only a 3 per cent quarter-on-quarter decrease.

In the face of limited choice in the mass market, the projects that drew strong interest in the primary market from buyers with HDB addresses in Q3 were largely mid-range developments that were launched earlier, for example, Southbank, CityLights, The Clift and The Quartz.

Overall, covering both primary and secondary markets, District 15 (Katong and East Coast) was the most popular among private home buyers with HDB addresses, followed by districts 19 (North East) and 16 (which includes Bedok and Upper East Coast).

DTZ said that as prices become less attractive, HDB dwellers' share of the percentage of purchases of private apartments/condos in the subsale market fell from 28 per cent in Q2 this year to 17 per cent in Q3 - the lowest level in 12 years.

The median subsale price for deals involving buyers with HDB addresses rose 14 per cent quarter-on-quarter to $774 per square foot in Q3 this year.