SINGAPORE (EDGEPROP) - The red hot HDB market seems to be defying all expectations. The chart below sums up the plot of the HDB story this year. After average monthly sales volume plummeted 79% during the circuit-breaker months, the recovery was not only swift, but immense. Sales volume jumped 573% to more than 2,400 units per month in June and has remained high since.
Source: Market Trends
HDB resale prices are also inching up after being in the doldrums for years. From June’20 to Oct’20, average resale HDB prices jumped 7%, almost reaching the highs of 2012 -- that was when the HDB market was at its hottest before cooling measures were implemented.
Before getting into the reasons behind the rise of resale HDBs, we delved deeper into the different Singapore towns and their respective transactions for further insights. As usual, we turned to data for guidance.
A lot more deals done in newer North-East towns...
Source: Heatmap
While almost all towns in Singapore saw more deals being done in Q3 vs. Q1 this year, the towns in the North-East region, namely Woodlands, Punggol, Sengkang and Tampines were the busiest (see heatmap). For example, in the new town of Punggol, transaction volume almost doubled from 306 units in Q1 to 596 units in Q3. Similarly in Tampines, there were 556 resale transactions in Q3 compared to 382 in Q1, an increase of almost 46%. The only town that experienced a decline in sales volume was Yishun, a much older estate that gained an unsavoury fame of late due to a spate of crimes and mysteries. In Q3 this year, there were 510 resale HDB transactions in Yishun compared to 519 transactions in Q1.
Most of the HDBs in these newer towns would have achieved its Minimum Occupancy Period (MOP) in the last 2 years. MOP is the minimum period owners are required to physically occupy the flat before they can sell it in the secondary market. In Punggol alone, we estimated that some 9,200 HDBs would have achieved its MOP in 2019 and 2020 compared to about 5,100 units in the two years prior. Newer HDBs are typically easier to sell due to its better renovated conditions and proximity to amenities.
... but price jumps seen primarily in mature towns in central and city-fringes
Source: HDB, EdgeProp
While the newer HDB towns grab all the headlines for the number of transactions, the real money deals occur in the city fringes. Million-dollar HDB flats, unheard of a mere few years back, are becoming regular news in areas like Tiong Bahru, Queenstown and Tanjong Pagar. In October alone, there were 13 million-dollar resale HDBs transacted, the highest ever on record. This equates the total number of million-dollar HDBs in the first quarter of the year.
Source: HDB, EdgeProp Shortlist Tool
Not surprisingly, these towns saw the highest price increases this year. Prices in the central area, driven by the landmark development Pinnacle @ Duxton grew 17% from Q1 to Q3 this year. Meanwhile, over in Queenstown, prices grew 13% as newer developments such as Skyville @ Dawson and Skyterrace @ Dawson achieved its MOP. These HDBs are designed by renowned architects and have facades which resemble private residential condominiums. Some also incorporate biophilic design such as rooftop gardens into the developments. Easy access to MRTs and proximity to city centers are other possible reasons which contribute to the growth in selling prices in Queenstown.
The need for space
Most analysts attribute this to the pent-up demand caused by limited activities during the barren circuit-breaker months. However, this alone cannot fully explain why sales stayed elevated for five consecutive months, and higher than the monthly sales in the previous years.
One key factor driving the rise in demand for HDBs is the need for space. Being locked down during the circuit breaker months and the continuance of working from home as the new routine have caused many buyers to re-evaluate their housing needs. Younger couples could also be looking out to get their own space instead of staying with their parents. HDBs are probably the most inexpensive asset class in Singapore on a per-square-foot basis to meet the need for space at times like these.
Lastly, upgraders and likewise downgraders (there must be a seller and buyer for each transaction) could be fueling the HDB transactions in the market space. Selling their HDBs could be an option for those seeking financial security due to the uncertainties in the employment market. As the current pandemic persists until a vaccine is made widely available, we expect the resale market for HDBs to remain vibrant throughout next year.