HDB resale prices may keep rising moderately for rest of 2023: Analysts

SINGAPORE: Resale prices for Housing and Development Board (HDB) flats may continue to rise moderately for the rest of 2023, analysts said, pointing to factors such as increased supply and concerns over affordability.

Flash estimates released by HDB on Monday (Oct 2) showed third-quarter resale prices went up by 1.2 per cent, compared with 1.5 per cent in the second quarter.

The slower pace of growth in the third quarter of 2023 could be attributed to "some price resistance" setting in amid inflationary and affordability concerns, according to OrangeTee & Tie's senior vice president of research and analytics Christine Sun.

"Home buyers’ affordability has been hit by rate hikes as interest rates have stayed higher and longer than anticipated," she said.

Huttons Asia's Senior Director for Data Analytics Lee Sze Teck further noted that with more Build-to-Order (BTO) flats and private homes being completed in the coming months, HDB owners moving into their new homes would need to sell their existing flats - thus increasing the supply of resale flats.

This may moderate price growth for HDB resale flats to around 5 per cent for 2023, he said.

Ms Sun's full-year growth forecast was in a similar range of 4 to 5.5 per cent.

Despite the Resale Price Index (RPI) - which reflects general price movements in the resale public housing market - edging up for the 14th straight quarter, the 1.2 per cent spike was below the average quarterly growth of 2.5 per cent in 2022.

Ms Sun also noted that the price increase of 3.8 per cent in the first nine months of 2023 was less than those seen over the same periods in 2022 (8 per cent) and 2021 (9.1 per cent). 

"The resale market may not see a repeat of the rapid price increases witnessed during the pandemic," she said. During that period, prices rose by 12.7 per cent in 2021 and 10.4 per cent in 2022.

"Prices may climb slower for the rest of the year."

Meanwhile, HDB resale transactions also fell to their lowest quarterly volume in three years, according to Monday's flash estimates.

Resale volume for the third quarter - up to Sep 28 - was 6,592. While this was 2.9 per cent higher than the previous quarter, it was 9.7 per cent lower than the same period last year, which saw 7,298 cases. 

Ms Sun said more Singaporeans bought HDB resale flats last quarter due to more grants given to first-timers and a delay in August's Build-to-Order sales launch.

Changes to housing policies announced during this year's National Day Rally also had an impact, said Mr Lee.

Prime Minister Lee Hsien Loong had announced that HDB estates would no longer be classified as mature or non-mature, with new BTO flats to be classified under Standard, Plus or Prime. 

The new Plus category will come with more subsidies and tighter resale conditions, including a 10-year minimum occupation period. Owners are also required to pay back part of the HDB subsidies upon resale.

This reclassification of flats to Prime and Plus "may have a role to play" in the spike of the number of million-dollar flat transactions in August, said Mr Lee. 

"Buyers are willing to pay more to buy a flat in the mature estates with no restrictions," he added. "Fifty out of 54 million dollar flat transactions are in mature estates."

ERA chief executive officer Marcus Chu noted that 126 million-dollar HDB flats changed hands in the third quarter, a new high compared with the 105 transactions in Q2 2023.

With 336 such flats transacted this year, set against the 369 for the whole of 2022, "we are looking at another record-breaking year", said PropertyGuru country manager Tan Tee Khoon.

He was on the same page with the other analysts, however, in pointing out that price growth has continued to slow and transaction volumes have continued to drop. These are hints "that the HDB resale market may have peaked", said Dr Tan.

UPCOMING FLAT SUPPLY

HDB added in its Monday press release that it will offer about 6,800 BTO flats in Choa Chu Kang, Kallang Whampoa, Queenstown and Tengah in the upcoming October sales launch.

Another 6,000 flats will be offered in the final sales exercise of 2023, which will be held in December. These flats will be in towns and estates such as Bukit Panjang, Jurong West, Woodlands, Bedok, Bishan, Bukit Merah and Queenstown.

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

It added that it is on track to launch 23,000 flats in 2023 and a total of 100,000 flats from 2021 to 2025.

Editor's note: The number of million-dollar HDB flats sold this year and in 2022 have been updated in this article after PropertyGuru corrected the figures it provided in its comments on resale prices.