HDB Q2 resale prices up 1.4%; moderation in rate of increase after cooling measures

SINGAPORE: The Housing & Development Board (HDB) is seeing some moderation in the rate of increase in resale prices after property cooling measures were implemented.

Among the cooling measures implemented in in December 2021, September 2022 and April 2023 were a wait-out period of 15 months before private property owners can purchase a non-subsidised HDB resale flat and the lowering of loan-to-value limit for HDB housing loans.

HDB's flash estimate of the resale price index for the second quarter of this year was 176.0, a 1.4 per cent increase from the previous quarter, it said on Monday (Jul 3). 

This was a higher increase than the 1.0 per cent growth in the first quarter of 2023 but still lower than the average quarterly growth of 2.5 per cent in 2022, according to HDB.

The resale price index provides information on the general price movements in the resale public housing market.

The price increase was mainly driven by five and four-room flats, said OrangeTee & Tie's senior vice president of research and analytics, Christine Sun.

Five-room flat median prices rose by 1.9 per cent to S$650,000 (US$481,045), while four-room flat median prices rose 1.5 per cent to S$545,000, she said.

Prices of three-room flats meanwhile dipped by 0.5 per cent.

The demand for resale flats may have risen after grants were increased for first-timers purchasing resale flats, said Ms Sun.

Private property downgraders might have driven demand for four-room flats as those above 55 years old are exempt from the 15-month wait-out period for four-room or smaller flats, she said.

Some HDB upgraders priced out of the private market may have also bought the bigger resale flats, she added.

Ms Sun warned that demand for resale flats may increase further in the second half of this year with stricter rules imposed for the non-selection of  Build-to-Order (BTO) flats from August.

"First-timers who lose their priority when they reject HDB's offer to pick BTO flats will likely turn to the resale market," she said.

RESALE VOLUME

HDB said the resale volume in the second quarter up to Jun 29 this year was 6,409. This was 4.6 per cent lower than the same period last year.

It is also the lowest in the last three years since the third quarter of 2020.

ERA Realty Network's key executive officer, Eugene Lim said the latest round of cooling measures implemented in April "may have caused some HDB homeowners to reconsider their plans to upgrade to a private home."

"Also, the current high borrowing costs have led to the postponement to upgrade to resale private homes and as such, this could also have contributed to the lower resale HDB volume,” he said.

A price mismatch between sellers and buyers also led to a lower transaction volume, said Lee Sze Teck, senior director of research at Huttons' Asia.

Additionally, buyers were lured to the BTO market as the HDB increased the supply of flats with shorter waiting times, Mr Lee said. 

13,000 BTO FLATS TO BE LAUNCHED

HDB also said a total of 13,000 BTO flats will be offered in the second half of this year, about 31 per cent more than the 9,923 units launched in the first half of the year. 

The numbers are subject to review as more project details will be firmed up closer to the launch dates, HDB said.

These flats will be launched in towns and estates like Kallang, Choa Chu Kang, Queenstown, Bedok and Bishan.

"To meet the increased housing demand, HDB has ramped up the supply of BTO flats by 35 per cent, from 17,100 flats in 2021, to 23,200 flats in 2022, and 23,000 flats in 2023. 

"HDB will continue to monitor the housing demand closely and continue to maintain a steady pipeline of supply. Meanwhile, we remain on track to launch a total of 100,000 flats from 2021 to 2025," it said.

Ms Sun said that some demand may be diverted to the BTO market with these launches.

"Some first-timers may be enticed as HDB will launch more flats in mature estates like Kallang, Whampoa, Queenstown, Bedok and Bukit Merah which are usually popular with buyers," she said.

The completion times for many of these projects may also be shortened, she added.

Mr Lim meanwhile expects the HDB resale market will continue to stabilise with the BTO launches. 

“This shift could prove advantageous for new homebuyers seeking their first property in the resale market, as an increasing number of sellers may become more aware of prevailing market conditions and may adjust their price expectations realistically," he said.