HDB resale price growth slows to 10.4% for 2022 as prices flatten, sales fall in Q4

Jan 28, 2023

THE red-hot housing market may finally be showing signs of cooling, say analysts, with resale prices of public housing flats flattening out and sales volume falling in the fourth quarter of 2022.

Data from the Housing and Development Board (HDB) showed prices of resale flats rising by 2.3 per cent from the previous three months – making for the slowest growth in the past year.

This is also the smallest quarterly increment since Q3 2020, when prices hiked by 1.5 per cent, highlighted Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie.

For the whole of 2022, resale prices rose by 10.4 per cent, slower than 2021’s record growth of 12.7 per cent. But Sun noted that this is still above the 5 per cent growth posted in 2020.

The 2.3 per cent Q4 rise announced on Friday (Jan 27) was slightly higher than the earlier estimated 2.1 per cent released on Jan 3.

PropNex Realty head of research and content Wong Siew Ying credited the slowdown to the property cooling measures rolled out in September to curb demand, as well as “muted market activity due to the seasonal lull”.

“Market observations suggest that the stock of HDB resale flats available for sale remain limited amid steady demand for them,” she added.

Wong also noted that the number of million-dollar resale flats had spiked to 370 units in 2022, from 2021’s 259 units.

“(This) played a part in fuelling concerns over housing affordability,” she said. “To set the number in context, the 370 flats accounted for just 1.38 per cent of total HDB resale transactions last year.”

Meanwhile, transaction volumes of resale flats dipped 12.6 per cent in Q4 to 6,597 units, from the 7,546 units in the previous quarter. Year on year, this was a 16.9 per cent decline.

Resale volumes for the whole of 2022 totalled 27,896 flats, 10.1 per cent lower than the 31,017 units in the previous year.

The drop in Q4 is due, in part, to the November build-to-order (BTO) exercise, said Mohan Sandrasegeran, One Global Group senior analyst of research and content creation. Nearly 10,000 flats were launched then, making for the largest such offering in a single launch to date. “Homebuyers likely gravitated towards the BTOs as it offers a diverse selection of flats in both mature and non-mature estates,” noted Sandrasegeran.

Other homebuyers might have opted not to sell their flats in Q4, he said, instead, choosing to wait for market conditions to improve or continue monitoring the impact of September’s cooling measures.

The HDB town with the highest median price of three-room flats was in Punggol at S$451,000, while the lowest was located in Geylang at S$335,000. For four-room flats, the highest median price was recorded in Kallang Whampoa at S$788,000, while the lowest recorded median price was in Jurong East at S$465,000.

For five-room and executive flats, the highest median prices were in Bukit Merah at S$899,000 and Hougang at S$845,900. The lowest median prices were in Jurong East at S$566,000 and Choa Chu Kang at S$679,000.

OrangeTee & Tie’s Sun pointed out that 10 out of 26 towns experienced a slip in median prices in the last quarter. The biggest decrease was in Serangoon and Jurong East at 6.5 per cent each, followed by Toa Payoh at 6 per cent.

On the other hand, 17 towns recorded a negative percentage point change when comparing Q3 to Q4’s price change with that of Q2 to Q3.

“(This shows) that many towns either saw a slower price increment or price fall after the cooling measures,” said Sun.

On the HDB rental market front, there were 56,647 HDB flats rented out, a marginal increase of 0.5 per cent from Q3. HDB approved 8,476 cases to rent out HDB flats, 3.5 per cent higher quarter on quarter and 19.7 per cent lower year on year.

The number of approved applications to rent out HDB flats for the entire 2022 fell by 15.1 per cent to 36,166 cases, from 42,623 cases in 2021.

Based on HDB’s latest data, the highest median rental price was for a five-room flat in Queenstown at S$4,200, while the lowest median rental price was for a three-room flat in Bukit Panjang at S$2,000.

In February, HDB will offer about 4,400 BTO sales flats in Jurong West, Kallang Whampoa, Queenstown and Tengah. Another 3,800 to 4,800 units will be offered in May. In total, HDB said it will launch up to 23,000 BTO flats in 2023.

HDB added that it “is prepared to launch up to 100,000 flats between 2021 and 2025 if needed”.

ERA Realty head of research and consultancy Nicholas Mak highlighted that the government’s bid to ramp up the supply of BTO flats demonstrates its determination to “tame the rising HDB resale prices” while meeting Singaporeans’ housing needs.

Still, Mak expects demand for resale flats to remain robust since some buyers might still prefer them, especially if they are in urgent need for housing.

“BTO applicants could also potentially switch to resale flats before they pay the downpayment due to the shorter waiting time for resale flats,” he said.

“Therefore, the key factors influencing whether more buyers will switch from the HDB resale market to buy BTO flats is whether the government could shorten the waiting time for BTO flats back to the pre-pandemic period of about three years.”

Analysts predict that demand for resale flats will soften in the coming year – in turn, resulting in a slowdown in price growth and stabilisation of the housing market.

This is because more BTO projects will be launched and completed every quarter, said Lee Nai Jia, PropertyGuru’s head of real estate intelligence, data and software solutions.

“As buyers and sellers recalibrate their expectations, it is expected that sales will slow in the immediate term,” he added.

Huttons senior research director Lee Sze Teck estimates that around 15,300 flats will exit their five-year minimum occupation period in 2023 – a plunge of nearly 50 per cent from the 30,199 flats in 2022, “drastically reducing the number of ‘newer’ flats for sale”.

Lee also noted that private owners looking to downgrade might start eyeing four-room flats instead of five-room and larger flats.

“This may potentially push up demand and prices for four-room flats,” he said. “The downside is that larger flats might see lesser interest in 2023.”

On the whole, Lee expects resale transactions to range between 24,000 and 26,000 in 2023, with resale flat prices stabilising and not growing more than 5 per cent.

https://www.businesstimes.com.sg/pro...-sales-fall-q4