HDB resale prices rose 2.6% in Q3, but at a slower rate

Oct 31, 2022

Resale prices of public housing flats increased for the tenth consecutive quarter in the third quarter of 2022, rising 2.6 percent from the previous quarter but slightly slower than the 2.8 percent increase in the second quarter.

According to Christine Sun, OrangeTee & Tie's senior vice-president of research and analytics, the slower growth in Q3 indicates that the public housing market is beginning to feel the effects of rising interest rates and inflationary pressures.

The Housing and Development Board (HDB) reported on Friday (Oct 28) that transaction volumes of resale flats increased 10.7 percent in the third quarter to 7,546 units, up from 6,819 units in the previous quarter. This was a 10.5% decrease year on year.

According to Nicholas Mak, ERA's head of research and consultancy, resale volume in the January to September period this year totaled 21,299 flats, an 8% decrease from the previous year.

The 2.6 percent Q3 increase announced on Friday was slightly higher than the 2.4 percent estimate released on October 3.

HDB resale prices were 11.6 percent higher year on year in Q3 2022, and have risen 8% in the first nine months of this year.

According to Huttons senior director of research Lee Sze Teck, resale prices have risen 27.4% since the "circuit breaker" period during the pandemic's peak in 2020. More larger flats were also sold in the third quarter.

According to ERA research, price growth in Q3 was driven by larger flat prices, according to Mak. The median price of executive flats, the largest public housing flats, increased 4% to S$780,000 in Q3 from Q2 according to ERA calculations. According to PropNex research, the median price of three-room flats increased by 0.5% to S$370,000 in Q3; the median price of four-room flats increased by 2% to S$520,000; and the median price of five-room flats increased by 3.3% to S$630,000.

The number of million-dollar flat deals in Q3 continued to rise, despite accounting for a small portion of the market. As of the end of Q3, 277 HDB resale flats had been sold for S$1 million or more this year, roughly 7% more than the total for 2021.

Huttons' Lee cited 111 million-dollar flat transactions in Q3 2022, up 35.4 percent from the previous quarter, with more million-dollar deals emerging in non-mature estates. A 1,776 sq ft executive maisonette in Bukit Batok sold for S$1.005 million in July, while a 1,603 sq ft 5-room loft unit in Punggol sold for S$1.198 million in September, with the buyer paying nearly S$200,000 in cash over valuation (COV).

The Q3 data, according to HDB, reflected market conditions prior to the recent implementation of cooling measures to promote "sustainable conditions" in the property market.

Wong Siew Ying, PropNex Realty's head of research and content, believes that these "targeted" measures will relieve pressure on the resale market, thereby moderating prices. She predicts that resale prices will rise by 9 to 10% this year, compared to a 12.7% increase in 2021.

However, OrangeTee & Tie's Sun believes that this moderation is only temporary as the market "rests."

"Previous trends show that our property market is highly resilient and typically recovers within six months of a cooling measure," she said. "Fundamentals like our strong household balance sheets, tight domestic labour markets, and long-term income growth will support housing demand."

There were 56,372 flats rented out at the end of Q3, a 0.6% increase from Q2. HDB approved 8,192 cases to rent out HDB flats, a 12% decrease from the previous quarter and a 21.4 percent decrease year on year.

Wong of PropNex predicts that renting will continue to rise in the coming months. Those affected by HDB's new 15-month waiting period may rent in the meantime, and demand will also come from "HDB upgraders who have sold their flats first before purchasing a private home in order to avoid having to pay the additional buyer's stamp duty."

HDB will offer approximately 9,500 BTO flats in Bukit Batok, Kallang Whampoa, Queenstown, Tengah, and Yishun in November. In February 2023, another 2,900 to 3,900 units will be available. Overall, HDB stated that it will launch up to 23,000 BTO flats in 2023 and is "prepared to launch up to 100,000 flats between 2021 and 2025 if necessary."

According to Huttons, the November 2022 BTO launch will be the largest ever and will draw demand from the resale market.