HDBs on Georges Lane in Whampoa. (Picture: Samuel Isaac Chua/The Edge Singapore)
SINGAPORE (EDGEPROP) -The HDB resale price index marked a 1.5% q-o-q increase in 2Q2023, piling onto the 1% q-o-q increase in 1Q2023. This marks the 13th consecutive quarter that the resale index has reflected rising prices across the public housing market.
Although prices continue to rise over the first six months of this year, the pace of resale price growth has moderated somewhat compared to the whole of 2022 which clocked an average quarterly growth of 2.5%.
Based on the latest public housing statistics, the overall prices for executive flats rose by 2.3% q-o-q from $800,000 in 1Q2023 to $$818,000 in 2Q2023. Meanwhile, prices of five-room flats climbed 1.9% from $638,000 to $650,000 over the same period.
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Diving into the numbers, the median price of flats increased in 18 out of 26 towns. Geylang registered the highest quarterly price growth of 19.2%, followed by Ang Mo Kio at 8.4%, the Central Area at 6.8% and Bukit Panjang at 6.1%.
Popular HDB towns that saw the highest resale transaction volumes last quarter were Punggol, Woodlands, Sengkang, Yishun and Bukit Batok. Resales in these five towns accounted for 37.4% of total HDB resales last quarter.
Despite the rise in prices, overall resale transaction volumes fell 6.7% q-o-q in 2Q2023, dipping from 6,979 resale flats in 1Q2023 to 6,514 resale flats last quarter. According to Christine Sun, senior vice-president of research & analytics at OrangeTee&Tie, this is the lowest volume since 2Q2020, when 3,426 flats were sold during the circuit breaker at the pandemic's start.
She adds: "Demand was considered resilient in the last quarter, considering that cooling measures were implemented in September 2022. Demand could have been sustained by more grants given to first-timers purchasing resale flats".
Lee Sze Teck, senior director of data analytics at Huttons Asia, also concurs that more generous housing grants likely fuelled demand last quarter. "The doubling in housing grants given to resale flat buyers led to the quickening in HDB resale prices growth to 1.5% in 2Q 2023," he says.
It is possible that the moderation in price growth so far this year stems from government efforts to tamper the market through a ramp-up in BTO supply, lowering of loan-to-value ratio to 80%, and a 15-month wait-out period for private property owners downgrading to an HDB flat, says Lee.
Read also: Five-room HDB flat in Tiong Bahru View sold for record $1.588 mil
Prices in the top five towns. (Credit: Huttons Asia)
Eugene Lim, key executive officer of ERA Realty, points out that the relatively slower pace of price increase in 1Q2023, compared to 2022, is indicative of "a shift towards a more sustainable growth trajectory for HDB resale prices following the robust price increases experienced over the last few years".
"Beyond a certain point, buyer resistance sets in. With mismatched seller and buyer expectations, deals take longer to close, and consequently overall (HDB) resale volume may decline," says Lim. An example he provides is the median price of a three-room HDB flat in Bukit Batok which was about $260,000 back in 2Q2020. But last quarter, the median price had shot up by 48% to $385,000.
Million-dollar flats continue to stand out as 105 of these transactions were recorded in 2Q2023 which represent about 1.6% of the total secondary market. In comparison, 103 million-dollar flat transactions were recorded in 1Q2023.
A new price record was also set last quarter when a jumbo HDB flat in Tiong Bahru sold for $1.5 million in June. EdgeProp Singapore reported the transaction which involved a 1,894 sq ft unit at 50 Moh Guan Terrace. The sales price translates to $7592 psf.
However, Lee says that buyers are increasingly "reluctant' to pay $1.1 million or more for an HDB flat. "More million-dollar flat transactions are in the range of $1 million to $1.1 million in 2Q 2023. Buyers may be rationalising paying a high price for an HDB flat and more have opted for 4-room flats with the proportion hitting a high of 30.5% in 2Q 2023 compared to 21.4% in 1Q 2023," he says.
Diving deep into the numbers, Lim says that there is an increase in the proportion of four-room flats changing hands for more than $1 million. "There was a notable increase in the proportion of 4-room resale HDB flats hitting the million-dollar mark. The figure rose from 20.4% in 1Q 2023 to 30.5% in 2Q 2023".
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But five-room, million-dollar deals are most of these deals, accounting for 43.7% and 42.9% of flats hitting the million-dollar mark in 1Q 2023 and 2Q 2023, respectively, he says.
Prices of resale HDBS by price segment. (Credit: Huttons Asia)
HDB also published an update on the upcoming BTO supply for 2H2023. The statutory board says that close to 10,000 BTO flats have been launched in the first half of this year, with another 13,000 flats ready to be launched in the second half of the year. (Find HDB flats for rent or sale with our Singapore HDB directory)
The next BTO sales exercise will take place approximately end-September or early October, rather than the usual end-August period, owing to the delay in ballot results for the May sales exercise. "In addition, HDB will also have more time to finalise the system changes needed for the new First-Timer (Parents & Married Couples) priority category and other changes which will take effect from the next sales exercise," says HDB.
Thus, the next BTO sales exercise will offer 6,700 flats in towns such as Chua Chu Kang, Kallang/Whampoa, Queenstown, and Tengah. Subsequently, the last sales exercise of the year that taking place in December will see about 6,300 flats on offer in Bedok, Bishan, Bukit Merah, Bukit Panjang, Jurong West, Queenstown, and Woodlands.
Looking ahead, some resale demand may be diverted towards these upcoming BTO projects, says Sun. She adds that some first-timers may be enticed as HDB will launch more flats in mature estates like Kallang/ Whampoa, Queenstown, Bedok, and Bukit Merah, which are typically popular with buyers.
"As stricter rules will be imposed for the non-selection of BTO flats from August 2023, first-timers who fail to obtain a BTO flat will likely turn to the resale market, thus sustaining demand in the second half of this year," she says.
Lee adds that, although more stringent penalties on non-selection of flats by applicants from September 2023 BTO may divert some demand to the resale market, the pipeline of BTO projects in mature towns as well as the relatively shorter construction period may also eventually siphon some resale demand.
Overall, the government's plan to inject 13,000 BTO flats into the market in 2H2023 will go a long way in helping to stabilise the HDB flat market, says Lim.
However, he cautions that HDB resale prices are likely to remain resilient as HDB upgraders moving into new suburban condos and EC launches face higher replacement costs and would want to sell their HDB flats at higher resale prices.
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