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HDB resale volume jumps to 10-year high in Q3 as prices rise 1.5% over quarter

HDB flats - ST file.jpg
This was not all pent-up demand: the resale volume is also 24.3 per cent higher than the 6,264 flats sold a year ago.

[SINGAPORE] The Housing Board resale market staged a stunning rebound in the third quarter of 2020, with transactions soaring to a 10-year high after diving to their lowest since 2007 in the previous three months.

There were 7,787 resale flats transacted in the July to September quarter, a 127.3 per cent rise from 3,426 units in the second quarter, when sales plunged 40 per cent quarter-on-quarter due to the two-month circuit breaker which ended on June 1.

But this was not all pent-up demand: the number is also 24.3 per cent higher than the 6,264 flats sold in the same period last year.

The resale volume at 7,787 flats is also the highest in ten years, since 8,205 flats were sold in the third quarter of 2010, analysts noted.

Buyers flocked to the HDB resale market as they favoured living space and affordability in the current economic climate, said Huttons Asia director of research Lee Sze Teck.

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Orange Tee & Tie head of research and consultancy Christine Sun said some demand could have been drawn from the Build-To-Order (BTO) market.

"Many BTO flats from recent launches were slated to be completed in four to five years time and the long waiting period drove some buyers to the resale market, especially for couples with urgent accommodation needs," she said.

Ms Sun added that many BTO launches were heavily oversubscribed and unsuccessful candidates had to turn to the resale market as an alternative.

HDB said around 9,300 BTO flats in various estates will be offered next month and February next year. The next Sale of Balance Flats exercise will also be held next month, barring any unforeseen circumstances.

Prices of resale HDB flats also rose, by a stronger 1.5 per cent quarter on quarter, after edging up 0.3 per cent in the second quarter. Year-on-year, prices rose 2.3 per cent.

Ms Sun said the increase in prices could be attributed to many newer HDB resale flats being sold in the third quarter.

"As newer flats tend to command higher prices than older ones, the overall price index could have been 'uplifted' by the newer flats. Some sellers have also raised their asking price since housing demand has returned," she said.

Mr Lee said the supply of resale flats in the third quarter was lower as some upgraders held back from selling their flats because of the six-months' extension on remission of the additional buyer's stamp duty (ABSD). As such, there were slightly more buyers than sellers for resale flats in Q3, resulting in higher prices, he added.

HDB resale prices may continue to climb in the coming quarters due to lower supply from the longer completion period for BTO flats and ABSD relief. Mr Lee said resale prices may increase up to 2.5 per cent this year, the largest price growth since 2012.

Ms Sun said the property market is still at risk from a confluence of economic challenges - a global economic slowdown, a grim employment outlook and the adverse impact of the withdrawal to come of government support measures for businesses.

Nevertheless, tailwinds from low-interest rates may prop up sales and sustain prices in the near term, she said.

Said Ms Sun: "We are cautiously optimistic that around 20,000 to 23,000 resale flats could be transacted this year. Prices may trend between 1.5 and 3.5 per cent for the whole of 2020."

For the HDB rental market, job losses may have led to the lower rental volume. There were 8,196 approved applications to rent out HDB flats in the third quarter, a 22.2 per cent drop from 10,539 in the previous quarter, and a 31.7 per cent fall from the same period last year.

Rents however saw an increase on average of 2.7 per cent, Huttons Asia estimated. Woodlands saw the biggest jump in rents due to more Malaysians renting flats in the area for its proximity to Johor.

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