SINGAPORE (EDGEPROP) - HDB resale flat prices continued their upward trajectory in 3Q2023, albeit at a slower pace. Flash estimates released by HDB on Oct 2 show that resale prices edged up 1.2% q-o-q in 3Q2023, marking a 14th consecutive quarter of growth. However, the increase in prices is lower than the 1.5% q-o-q growth recorded in 2Q2023 as well as the 2.5% average quarterly growth registered in 2022.

The slower increase in resale flat prices may indicate price resistance setting in amid inflationary and affordability concerns, notes Christine Sun, senior vice president of research and analytics at OrangeTee & Tie. Year-to-date, resale flat prices have grown 3.8%, significantly lower than the 8% increase recorded in 2022 and the 9.1% increase recorded in 2021 across the same period.

A total of 6,592 resale flat transactions were recorded by HDB in 3Q2023, 2.9% higher than the previous quarter, but 9.7% lower y-o-y. It is the lowest 3Q volume recorded in the last three years since 2020, HDB states. Sun attributes the bigger volume to the higher grants given to first-time home buyers that were announced in February as part of Budget 2023; as well as a delay in the August Build-To-Order (BTO) sales launch.

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Mohan Sandrasegeran, head of research and data analytics at SRI, concurs. He adds that the November BTO exercise, which typically includes the sale of balance flats, has been pushed to December. “The change in schedule has likely also prompted couples in urgent need of housing to pivot their focus towards the HDB resale market as it represents a more immediate and accessible option,” he comments.

Lee Sze Teck, senior director of data analytics at Huttons Asia, observes that the higher resale prices and transaction volume follow changes in housing policies announced during the National Day Rally on Aug 20. From 2H2024, BTO projects will reflect a new classification system that segregates new flats according to locational attributes, replacing the previous system that classified housing estates as “mature” and “non-mature”.

Under the new system, BTO units will be categorised as either Standard, Plus or Prime flats. Standard flats are located islandwide and will come with standard subsidies and restrictions.  Plus flats are those in HDB projects outside the Central Area but are in “choicer locations” near MRT stations or amenities. Prime flats are those located closer to the city centre. Plus and Prime flats will come with more subsidies, in addition to tighter restrictions such as a longer minimum occupation period of 10 years and limitations for renting out the property.

As a result of this impending reclassification, demand has shifted to existing resale flats in mature estates that will not face restrictions on resale, comments Huttons’ Lee. He adds that buyers are willing to pay more for such flats, which in turn may have contributed to the higher number of million-dollar resale flat transactions.

Statistics on data.gov.sg show that there were an estimated 127 resale flats transacted for at least $1 million in 3Q2023, 21% more than the previous quarter. In August, 54 million-dollar flat transactions occurred, out of which 50 took place in mature estates, Lee points out. He expects million-dollar HDB transactions to exceed 400 for the whole year.

Looking ahead, HDB says about 6,800 BTO flats in Choa Chu Kang, Kallang Whampoa, Queenstown and Tengah will be offered in the upcoming sales launch in early October. In December, roughly 6,000 more flats will be put up for sale, located in estates such as Bukit Panjang, Jurong West, Woodlands, Bedok, Bishan, Bukit Merah and Queenstown.

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The incoming supply, combined with ongoing concerns on affordability, will likely temper resale flat price growth, says. OrangeTee & Tie’s Sun. “Prices may climb slower for the rest of the year, with full-year growth at around 4% to 5.5%,” she predicts.