HDB resale prices rise by modest 1.5% in Q2, but volumes fall 6.7%
RESALE prices of public housing continued to rise in the second quarter of 2023, going up 1.5 per cent – though the increase is less than the average quarterly growth of 2.5 per cent in 2022, data released by Housing and Development Board (HDB) on Friday (Jul 28) showed.
The modest 1.5 per cent increase indicates that the HDB resale flat prices may have peaked, said PropertyGuru Singapore’s country manager Tan Tee Khoon.
Quarter on quarter, resale price growth in Q2 was higher than the 1 per cent growth in the first three months of the year. The 1.5 per cent increase in resale prices was slightly higher than the 1.4 per cent announced during HDB’s flash estimate released on Jul 3.
It said that the moderation in the rate of increase of prices were the result of the measures to moderate demand and encourage prudent borrowing, such as the wait-out period of 15 months before private property owners are allowed to purchase a non-subsidised resale flat.
Cutting the loan-to-value limit for HDB housing loans to 80 per cent also dampened the resale market, where prices have risen for 13 straight quarters.
Paying a premium
While buyers are still willing to pay a premium for space, Tan said more are turning their attention to the Build-to-Order (BTO) market. He expects about 16,000 flats to enter the resale market as they hit the five-year minimum occupation period this year. The fresh supply would give buyers more choices and reduces the pressure to match the high asking prices of current sellers, added Tan.
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In Q2, the median price of HDB flats rose in 18 out of 26 towns, noted Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie. Flat values in Geylang rose the most, by 19.2 per cent from Q1, followed by Ang Mo Kio at 8.4 per cent, the Central Area at 6.8 per cent, and Bukit Panjang at 6.1 per cent.
Seasonal factors
Data from HDB showed that resale transaction volume fell 6.7 per cent in Q2 to 6,514 units, from 6,979 homes transacted in the previous quarter. Year on year, the number of resale deals fell 4.5 per cent. While HDB pointed to seasonal factors at play in the second quarter – transaction volumes fall during the school holidays – Q2’s resale volume was, nonetheless, the lowest since the third quarter of 2020.
The fresh supply of BTO flats may have drawn some demand away from the resale market, with HDB putting out more flats with shorter waiting time, said Lee Sze Teck, senior director of data analytics from Huttons Asia.
HDB will offer about 6,700 new flats in the September-to-October period, and another 6,300 flats by the end of the year.
Data from Huttons Asia showed an estimated 105 million-dollar flat deals in Q2, up slightly from the 103 tallied in the first quarter. Such transactions accounted for about 1.6 per cent of the total transaction volume in the second quarter. Most deals were in the range of S$1 million to S$1.1 million, with reluctance among buyers to pay S$1.1 million and above for an HDB flat.
Wong Siew Ying, head of research and content at PropNex Realty, suggested that another possible reason for the lower resale transactions was the delay in the HDB Flat Eligibility (HFE) letter of approval. The letter was introduced in May 2023 to streamline eligibility checks for the purchase of a flat, housing grants and HDB loans in a single application.
Uptick in rental volume
A total of 9,842 units were rented out during the quarter, an increase of 1.9 per cent from the 9,657 homes in Q1 2023. Year on year, the Q2 number was 5.7 per cent higher. As at the end of Q2 2023, 56,858 HDB flats were being rented out, up 0.4 per cent over the previous quarter.
Looking ahead, the resale market is expecting 25,000 to 27,000 transactions of flats this year, said Mogul.sg chief research officer Nicholas Mak.
As HDB’s rule on non-selection of BTO flats apply from August, first-time buyers who fail to obtain a BTO flat may turn to the resale market, thus sustaining resale demand in the second half of this year. In terms of overall resale prices, OrangeTee & Tie predicts prices may rise by 4 per cent to 6 per cent in 2023.
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