In August, HDB resale prices increased by 0.4% but volumes continued their downward trend

Sep 08, 2022

Despite the fact that the prices of Housing Board (HDB) resale transactions increased for the 26th consecutive month in August, the numbers of these transactions continued their downward trend, which may indicate a decrease in demand.

According to flash estimates that were provided on Thursday (September 8th) by property site SRX and 99.co, sales prices grew by a marginal 0.4 percent in August from the previous month. Mature and non-mature estates booked price increases of 0.8 percent and 0.2 percent, respectively.

The prices of three-room and five-room units went up by 0.5 percentage point month-on-month, while the prices of four-room and executive apartments went up by 0.8 percentage point and 0.7 percentage point, respectively.

As this is the second month in a row that price growth for resale HDB flats have slowed, the chief executive officer of Huttons Asia, Mark Yip, thinks that some price resistance may have started to set in and that it's possible that it's already begun. As a point of comparison, the month of June showed a rise of 1.2% when compared to the previous month. After this, prices increased at a more moderate rate of 0.7% in the month of July.

It is anticipated that price increases in the HDB resale market would level out for the last four months of 2022. According to Yip, "transaction volume should be approximately 27,000 apartments and prices may climb by up to 10% in 2022."

In August, resale prices increased by 10.8% on a year-over-year basis, with a rise of 11.4% in non-mature estates and an increase of 10% in mature estates. Prices for all sorts of rooms increased as well, with 5-room executive flats increasing by 12.8 percent, 3-roomers increasing by 11.4 percent, 4-room units increasing by 11.2 percent, and 5-room units increasing by 10.7 percent.

However, the total number of resale apartments that were transacted in August was lower than in previous months, coming in at 2,323. This figure represents a fall of 1.7 percent from July and a decrease of 15.5 percent from the previous year.

According to the number of bedrooms, the units with four bedrooms brought in 41.2 percent of the total volume, while those with five bedrooms brought in 24.9 percent and those with three bedrooms brought in 24.7 percent. The remaining volume was given by a variety of room kinds, with the executive apartments accounting for 7.1% of the total.

Pow Ying Khuan, the head of research for 99.co, said that the decrease in HDB resale volumes for the month of August might be largely attributed to the Hungry Ghost Festival. During this time, people tend to "avoid making important decisions," including the purchase of a property, he added.

In addition, more people are turning to the build-to-order (BTO) sales exercise as HDB said it would launch more BTO units over these 2 years, so the decline in transaction volumes year-on-year could signal lower demand due to rising HDB resale prices and home loan interest rates, said Pow. This is on top of the fact that more people are turning to the BTO sales exercise.

Wong Siew Ying, the head of research and content for PropNex Realty, stated that "some factors that may have slowed transactions include a mismatch in price expectations between sellers and buyers as some owners hold on to firm asking price for well-located flats." Ying went on to say that "some owners hold on to firm asking price for well-located flats."

In addition to this, she mentions that the BTO exercise that HDB held in August covered well-known mature towns such as Ang Mo Kio, Tampines, and Bukit Merah. Her point of view is that there are likely some prospective buyers of HDB resale apartments who were tempted by such appealing developments.

According to Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, she feels that the more cheap pricing of apartments issued during the August BTO launch might have been another contributing cause to the sluggish buying attitude in the HDB resale market this month.

The sale of a five-room design, construct and sell scheme unit at The Peak @ Toa Payoh for close to S$1.4 million was the transaction that resulted in the highest overall price paid for a resale apartment in the month of August.

The highest price ever recorded for a transaction in a non-mature estate during the month was for an executive apartment unit that was located on Woodlands Avenue 1 and sold for close to one million Singapore dollars. According to Pow from 99.co, Woodlands now has the greatest amount of HDB resale apartments worth one million dollars among the non-mature estates. There have been 4 sales in this price range.

During the month of August, a total of 33 HDB resale apartments were sold for more than one million dollars each. This number is comparable to the tally for the previous month and represents 1.4% of the total resale transactions that took place during the month.

According to projections provided by Yip of Huttons, there may be as many as 350 HDB million-dollar flat transactions during the year of 2022. Wong of PropNex stated that it is "looking odds-on" to exceed the record 259 units that were resold last year at S$1 million or more, noting that there had already been at least 243 of these transactions so far this year.

"With an employment rate that is solid and income growth that is on the rise, there is no incentive for sellers to decrease prices at this time. We may anticipate more sellers, especially new apartments in older estates to challenge the million-dollar level. According to Sun, who works at OrangeTee & Tie, this means that the upcoming months may bring about an increase in the number of transactions worth one million dollars.