HDB resale prices rise for 8th straight quarter, up 2.4% in Q1

Property consultants say gains may have been stoked by demand for larger flats and those in pricier city-fringe areas

Apr 28, 2022

HOUSING Board (HDB) resale prices rose for the eighth consecutive quarter in the first quarter of 2022, up 2.4 per cent from the fourth quarter of 2021, HDB announced on Friday (Apr 22).

According to ERA Realty head of research and consultancy Nicholas Mak, prices were driven by appreciation in larger flats. He noted that in the 3 months, median prices of 5-room and executive flats increased 2.6 per cent and 2.8 per cent quarter on quarter respectively.

The median price of 3-room flats rose by a slightly smaller 2.3 per cent, while that of 2-bedders had remained unchanged.

Tan Tee Khoon, country manager of PropertyGuru Singapore, noted that demand for large flats came from HDB upgraders who previously opted for private housing projects. The lack of new condominium and executive condominium (EC) launches in Q1 2022 saw these buyers going for larger, resale HDB flats in more attractive and expensive city-fringe areas," he said.

However, OrangeTee & Tie senior vice-president of research and analytics Christine Sun also noted that the quarter saw transaction volumes fall in almost all flat types, with the biggest drops seen among larger flats.

Last quarter's price growth came despite lower transaction volumes, which were dampened by the Chinese New Year lull and dwindling stock of resale flats.

Transactions fell to 6,934 cases, down 12.7 per cent quarter on quarter and 8.5 per cent compared with the previous year.

"This is the first time in nearly 2 years that sales volume dipped below 7,000 units. The previous low was in Q2 2020 when sales fell by 41.9 per cent to 3,426 units during the 'circuit breaker' period in Q2 2020," Sun said.

Most of the quarter's transactions took place in housing estates Hougang/Punggol/Sengkang, Bukit Batok/Bukit Panjang and Sembawang/Yishun, according to Tan. He said: "This can be attributed to the large number of HDB flats fulfilling their Minimum Occupation Period (MOP) in those areas."

Million-dollar HDB flat transactions also continued to drive up prices. Last quarter, 82 homes sold for more than S$1 million in the first 3 months of 2022, making it "on track to sustain the momentum" from the whole of 2021's record 259 flats, Tan said.

Some 31,000 HDB flats are expected to reach the end of their MOP this year. While this boosts supply, the flats are relatively new and could end up fetching higher prices in the resale market.

Friday's price growth was slightly higher than the estimated 2.3 per cent that HDB had released on Apr 1.

However, last quarter's rise was still at a slower pace compared with the record 3.4 per cent increase seen in Q4 2021.

Property consultants added that the government will be ramping up supply of public housing in the coming months, which could help cool the robust resale market. HDB will offer about 5,300 build-to-order (BTO) flats spread across Bukit Merah, Jurong West, Queenstown, Toa Payoh and Yishun next month.

Meanwhile, in August, HDB will offer about 6,300 to 6,800 BTO flats in Ang Mo Kio, Bukit Merah, Choa Chu Kang, Jurong East, Queenstown and Woodlands.

Mak noted that as delays and disruptions in the construction of BTO flats gradually ease, some home buyers might turn away from the resale market and choose to buy new BTO flats instead. "But in the absence of an economic slowdown, these 2 factors should not cause the HDB resale prices to contract," he said.

As the Russia-Ukraine war triggers turmoil in the global financial markets, inflation could be seen driving up living costs, pushing some buyers out of the market, Sun added.

"Middle and lower-income Singaporeans, who form the bulk of purchasers of HDB flats, may be more affected by a rising cost of living. As people spend more on basic necessities and allocate more budget to other expenses, they may be reluctant to pay top dollar for resale flats. Buyers may be more price-sensitive and select cheaper homes such as smaller units or those further from the city centre," she said.

Sun predicted prices to rise between 5 and 8 per cent for the whole of 2022, while Mak expects to see about 6 to 10 per cent growth.

https://www.businesstimes.com.sg/rea...er-up-24-in-q1