SINGAPORE (EDGEPROP) - Despite rising for a 12th consecutive quarter, HDB resale prices saw a further slowdown in growth, according to HDB flash estimates. The resale price index inched up 0.9% q-o-q in 1Q2023.

This is slower than the 2.3% increase recorded in 4Q2022 and marks the third consecutive quarterly price slowdown. It is also the smallest quarterly increase since 2Q2020, when prices grew just 0.3% q-o-q amid the Covid-19 “circuit breaker” lockdown.

On a y-o-y basis, resale HDB flat prices increased by 8.7%. (Find HDB flats for rent or sale with our Singapore HDB directory)

Eugene Lim, key executive officer at ERA Realty Network, believes the further slowdown points to price resistance setting in after a long spate of growth. Over the last three years, HDB resale prices have surged 31.9%, outstripping private residential property prices which rose 27.9% over the same period.

The price resistance comes as more buyers show restraint when making offers in the resale market. “This is because a higher purchase price could well mean paying higher cash-over-valuation,” he explains. “Also, with the loan-to-value limit for a loan from HDB lowered to 80%, buyers with insufficient CPF funds for the 20% would have to foot out more cash.”

Christine Sun, senior vice president of research & analytics at OrangeTee & Tie, adds that the price softening comes amid higher housing inventory, as more flats have been completed over the past months. “Further, the government continued to launch BTO (Build-To-Order) projects and released new flats for sale,” she comments.

Sun also observes an increase in the proportion of smaller flats transacted in the last quarter, which may have contributed to the slower price growth. The proportion of four-room and smaller flats transacted grew from 69.7% in 4Q2022 to 71.5% in 1Q2023, while big flats dipped from 30.3% to 28.5%.

Lee Sze Teck, senior director of research at Huttons, highlights that resale volume remained similar to the previous quarters, with 6,600 flats transacted in 1Q2023. In addition, million-dollar flat transactions also remained steady, with 101 resale flats fetching at least $1 million last quarter. The number of million-dollar flat transactions is 9.8% higher than 4Q2022 and 21.6% higher than a year ago.

Nonetheless, he observes that the cooling measures for private property owners may have resulted in a shift in buying demand for smaller flats. “In 3Q2022, 5.4% of million-dollar flat transactions were of four-room and smaller flats. After the cooling measures, this increased to 14.1% in 4Q2022 and further went up to 21.8% in 1Q2023.”

Going forward, HDB resale price growth is expected to continue moderating over the year.  “The HDB resale market is likely to trend towards stabilisation and see not more than 5% increase in 2023,” says Lee. He is projecting total resale transactions to be in the range of 24,000 to 26,000 for the full year.

Meanwhile, OrangeeTee & Tie’s Sun forecasts resale flat prices to grow between 5% and 8% this year. She anticipates buyers to continue showing preference for smaller flats, as macroeconomic conditions crimp their purchasing power and higher grants are given to first-timers purchasing four-room and smaller flats.

In terms of supply pipeline, HDB says some 5,400 flats will be offered in the May BTO exercise in estates including Bedok, Kallang Whampoa, Serangoon and Tengah. For the August BTO exercise, HDB will offer between 5,200 and 6,200 flats in estates including Bukit Merah, Choa Chu Kang, Kallang Whampoa, Queenstown and Tengah. “HDB will continue to monitor the housing demand and is prepared to launch up to a total of 100,000 flats from 2021 to 2025,” it says.

Check out the latest listings near Bedok, Serangoon, Choa Chu Kang, Queenstown