HDB resale price fall not seen derailing recovery

SRX Property flash estimates show resale prices slipping 0.3% in September from August, while resale transaction volumes decline 14%

Oct 06, 2017

Lynette Khoo

HDB resale prices slipped 0.3 per cent in September from a month ago, reversing from a 0.2 per cent uptick in August, SRX Property flash estimates show.

Resale transaction volumes in September, estimated to be 1,683, also represented a 14 per cent drop from August, and almost unchanged from September last year.

But this new set of data did not stoke alarm among market watchers, who believe that the gradual stabilising of the HDB resale market remains on track.

OrangeTee head of research and consultancy, Wong Xian Yang, said the fall in HDB resale prices could be partly due to lower quarter-on- quarter volumes in the third quarter as buyers held off their purchases in anticipation of the Hungry Ghost Festival.

"Some demand from the resale market could have been diverted towards the re-offer of Balance Flats Exercise in August, which was heavily oversubscribed," he said.

While HDB resale price changes are expected to be range-bound between minus 1 per cent and 1 per cent this year, they could start rising moderately by up to 3 per cent next year on the back of higher expected private property prices.

ZACD Group executive director Nicholas Mak, who also heads research and consultancy, noted that the month-on-month decline in transactions "is nothing shocking" as the figure is still near the 12-month average of 1,656 resale transactions based on SRX Property data.

Neither is he expecting another steeper fall in resale prices in subsequent months. "The HDB resale market is a bit soft but stabilising. In fact, it is near the bottom despite the steeper decline in September."

By computing quarterly averages from SRX Property's monthly indexes, HDB resale prices are estimated to have fallen 0.7 per cent during the third quarter and 1.6 per cent over the first three quarters.

Official flash estimates by the Housing & Development Board on Monday showed a 0.6 per cent price dip for HDB resale flats during the third quarter compared to the second quarter, and a 1.3 per cent fall over the first three quarters.

The third-quarter decline - the steepest since Q1 2015 when the official index shed one per cent - surprised some market watchers given the enhancements earlier this year in CPF Housing Grants for first-timers buying resale flats and the uptrend in HDB resale volumes seen so far.

This was also a contrast to a 0.5 per cent quarter-on-quarter rise in the Urban Redevelopment Authority's flash estimate for its third quarter private residential price index.

Based on SRX Property's estimates, the total number of HDB resale transactions in the first nine months this year was 15,191, after some 20,813 transactions were registered with the HDB for the whole of 2016.

Almost all HDB resale transactions for each month are captured by the time the flash report is published, said SRX Property.

The resale price decline in September was led by executive flats, which fell 1.5 per cent from a month ago. Resale prices of HDB three-room and four-room dipped 0.5 per cent and 0.6 per cent respectively, while five- room flats inched up 0.1 per cent.

From a year ago, resale prices in September were 1.8 per cent lower; they were 12.3 per cent below the peak in April 2013. Resale prices in mature estates held up with a 0.8 per cent uptick in September from a month ago, while non-mature estates slipped one per cent.