SINGAPORE (EDGEPROP) - According to flash estimates released by HDB on July 3, resale flat prices rose 1.4% q-o-q in 2Q2023, faster than the 1% increase registered in 1Q2023. It also marks a 13th consecutive quarter of growth. However, it is lower than the average quarterly growth of 2.5% recorded in 2022, HDB states.

Resale flat transaction volumes declined by 3.9% q-o-q in 2Q2023 to 6,409 units – 4.6% lower y-o-y and the lowest volume recorded in the last three years since 3Q2020.

The faster pace of growth of resale flat prices in 2Q2023 comes amid higher demand following the increase in grants given to first-time home buyers, notes Christine Sun, senior vice president of research and analytics at OrangeTee & Tie.

As part of Singapore’s Budget 2023 which was announced in February, eligible families purchasing four-room or smaller resale flats for the first time would be able to receive enhanced Central Provident Fund housing grants of $80,000, up from $50,000 before. For those looking to buy five-room flats, grants have been increased to $50,000 from $40,000 previously.

In light of the enhanced grants, demand from private property downgraders may have been diverted to four-room flats, notes Sun. This is because those above 55 years old are exempt from the 15-month wait-out period applicable to private property owners buying a resale flat if they were to buy four-room or smaller flats. According to ERA’s Lim, in 2Q2023, the percentage of four-room HDB resale transactions stood at 48.4%, higher than the 45.3% recorded in 1Q2023.

Nonetheless, while the grants have given buyers a boost in their housing budget, there is still a price mismatch between sellers and buyers, underpinning the lower transaction volume last quarter, says Lee Sze Teck, senior director of research at Huttons Asia. He opines that some buyers may have also opted to go for a Build-To-Order (BTO) flat, as HDB has increased the supply of flats with the shorter waiting time.

In 2Q2023, an estimated 90 resale flats were sold for at least a million dollars, which Lee notes is 12.6% lower than the 103 million-dollar flat transactions logged the previous quarter. The priciest flat transacted was an adjoined flat at Moh Guan Terrace, which changed hands for a record $1.5 million last month.

Despite the record-breaking transaction, Lee notes that most of the million-dollar flat sales occurred in the $1 million to $1.1 million range. “Buyers may be rationalising paying a high price for an HDB flat and more have opted for four-room flats,” he says. (Find HDB flats for rent or sale with our Singapore HDB directory)

Going forward, as more BTO flats are completed in the coming months, the supply of resale flats for sale may increase as owners moving to a BTO flat will need to sell off their current flat, Lee says. “The increase in the number of private residential launches may see more HDB upgraders opting to sell their flats first so that they do not need to pay the 20% ABSD (additional buyer’s stamp duty) upfront.”

Meanwhile, some demand for resale flats may be diverted to the BTO market, as HDB continues to launch new flats across various estates. In the August BTO exercise, 6,700 BTO flats will be offered for sale, while 6,300 BTO flats will be offered in November.

Given the increase in both BTO and resale flat supply, Lee anticipates resale flat price growth to moderate. He expects full-year price growth to clock in at not more than 5%, with an estimated transaction volume of between 24,000 and 26,000.