Sales of HDB resale flats hit eight-year high in 2020 as prices climb 5%

[SINGAPORE] The Housing Board resale market ended 2020 on a strong note with flat prices edging up in many locations and buyer demand remaining buoyant despite the Covid-19 pandemic.

Prices of HDB resale flats rose for for a third consecutive quarter, climbing 3.1 per cent in the last three months of 2020 compared with the previous quarter, according to data released by the HDB on Friday.

This marks the highest quarterly increase since the third quarter of 2011 when prices rose 3.8 per cent.

For the whole of 2020, prices rose 5 per cent, the steepest increase since the fourth quarter of 2012 when prices rose 6.5 per cent.

This is also higher than the 0.1 per cent price gain in 2019.

Sales of HDB resale flats reached an eight-year high in 2020 with the number of resale transactions up 4.4 per cent to 24,748 units from 23,714 units in 2019.

The highest number on record was in 2012 when 25,094 HDB resale flats changed hands.

In the fourth quarter of 2020, resales dipped: 7,642 units were sold, 1.9 per cent lower than 7,787 units in the previous quarter. Year on year, though, sales were up 20.6 per cent from the 6,339 units sold in the fourth quarter of 2019.

Christine Sun, senior vice-president of research & analytics at OrangeTee & Tie, said the rise in prices was unexpected against the economic crisis brought on by Covid-19 and a growing supply of HDB flats.

However, the slew of stimulus measures launched by the government such as the job support scheme to support the economy has helped to prop up the HDB market, she said.

"Most workers were able to keep their earnings with the help of various schemes. Some buyers were confident that they have the ability to service their housing loans and proceeded with their new home purchases," said Ms Sun.

She noted that Singapore is now "reaping a harvest of market stability" as a result of strict measures such as the total debt servicing ratio, mortgage servicing ratio and seller's stamp duty that were put in place over the years.

"On hindsight, these measures have sown good seeds of financial prudence and soundness in the financial system, which have prevented most buyers from over-leveraging and built a buffer against huge credit losses in times of market uncertainties," she said.

Ms Sun said that despite the price hikes, she believes the HDB market is not at risk of a housing bubble for now. "Typical signs of an asset bubble include the decoupling of prices from housing income, and excessive speculative buying activities... Many measures have already been put in place to prevent some of these scenarios from occurring," she said.

She also noted that HDB resale flats prices are still 7.6 per cent below their peak in the second quarter of 2013. HDB resale prices rose for 17 continuous quarters since the second quarter of 2009 to reach that peak.

On the HDB rental market front, approved applications to rent out HDB flats increased by 3.4 per cent from 8,196 units in third quarter of 2020 to 8,472 units in the fourth quarter of 2020.

The number of approved applications was 29.9 per cent lower than the 12,079 units approved in the fourth quarter of 2019.

At the end of 2020, a total of 59,092 HDB flats were rented out, a slight increase of 0.05 per cent over the previous quarter.

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