HDB resale prices increase 3% in Q2, deals fall amidst Covid-19 curbs

Experts anticipate prices to increase even more as need overtakes supply

Jul 24, 2021


RESALE prices for Housing and Development Board (HDB) flats climbed up for the 5th successive quarter, though the volume of transactions were struck by tightened Covid-19 measures.

HDB resale volume diminished 6.8 percent over the previous quarter, in the middle of phase 2 (heightened alert) measures, when homes were permitted to get just 2 distinct visitors every day.

The number of deals fell to 7,063, down from 7,581 in the first quarter.

In the 2nd quarter of this year, resale prices increased 3 percent over the previous 3 months, matching the boost seen in the very first quarter, according to data released by the HDB on Friday. The figure is higher than HDB's preliminary estimate of a 2.8 percent increase made 3 weeks earlier.

Year-on-year, nevertheless, resale transactions were 106.2 percent higher due to circuit breaker measures in 2020.

Property experts anticipate that prices are most likely to increase even more, with demand overtaking supply in part due to hold-ups in completion for brand-new flats.

Aside from limited viewings during the heightened alert phase in May to June, some sellers' refusal to budge on asking prices also slowed transactions, said Huttons Group chief executive Mark Yip.

Christine Sun, OrangeTee & Tie senior vice-president of research and analytics, noted that current resale prices are just 2 per cent below their peak in the second quarter of 2013, and that prices are likely to reach a new high by the second half of 2021.

Resale prices have also risen 6 per cent in the first six months of this year, and 11 per cent since the circuit breaker period in the second quarter of 2020.

While there was a slight pullback in sales volume in the second quarter, buyer demand remains strong and transactions were still higher than pre-pandemic levels, she highlighted.

"The strong demand and home supply shortage may keep resale prices elevated in the coming months," Ms Sun said.

"Construction delays are expected for many Build-To-Order (BTO) projects and many young couples with urgent housing needs may continue to turn to the resale market, although the supply lag may begin to ease next year when construction activities continue to pick up."

Mr Yip shared these sentiments, noting that the strong price gains reflect the shifting focus from new flats to resale units due to delays in completion.

"It may also indicate that more buyers are asking for higher prices which may result in more instances of cash over valuation," he said.

More than 14,000 resale flats were transacted in the first half of the year, which makes it the highest first half-year sales since 2010, when 17,598 units were sold.

Mr Yip said that the resale market could see sales volume of between 27,000 and 29,000 units this year, which would be the highest since 2010.

The number of approved applications to lease HDB flats increased 2.8 percent to 10,979 cases in the 2nd quarter compared to the previous three-month duration.

Approved rental applications were likewise 4.2 percent higher compared to the very same duration last year.

Another 3,100 to 3,600 BTO flats will be offered in Choa Chu Kang, Hougang, Jurong West, Kallang/Whampoa and Tengah in November.

As at the end of June, there were 57,755 HDB flats leased, 0.7 percent lower than the previous quarter.

HDB will launch about 4,900 BTO flats in Queenstown, Kallang/Whampoa, Tampines, Jurong East and Hougang next month.