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SINGAPORE — With prices trending downwards since 2013, the market for Housing and Development Board (HDB) resale flats may have turned the tide as prices have now increased at their fastest pace in eight years.
This is according to the HDB’s public housing data for the third quarter of 2020 released on Friday (Oct 23), which also showed that transaction volumes have reached a 10-year high.Analysts expect this upward trend to continue with prices increasing between 1.5 and 3.5 per cent for 2020.
Based on HDB’s data, resale prices went up 1.5 per cent compared to the previous quarter — the highest growth rate since the fourth quarter of 2012. The resale price index is now at 133.9, back to levels seen in two quarters of 2017.
Transaction volumes also rose 127.3 per cent from the previous quarter to hit 7,787 — the highest since the first quarter of 2010.
Prices started a downward trend in 2013 when the Government lowered the mortgage servicing ratio to 30 per cent, capping the proportion of a homeowner’s monthly income that goes into repaying his mortgage at that percentage.
The market softened even more after March 2017 when former National Development Minister Lawrence Wong told buyers not to assume that all older HDB flats would be automatically eligible for the Selective En bloc Redevelopment Scheme.
The scheme allows selected flats to be redeveloped and the owners reimbursed and rehoused in a new HDB estate nearby.
Ms Christine Sun, head of research and consultancy at property agency OrangeTee, said that the public housing market staged a “stunning rebound”, given that historically low sales were clocked in the second quarter of 2020 as house viewings were banned during the circuit breaker months of April and May.
That period saw most economic activities come to a standstill as part of the authorities’ efforts to curb the Covid-19 pandemic.
One factor likely pushing prices up is the newer HDB resale flats, which have just hit their minimum occupation period of five years, entering the market and forming a bigger proportion of sales, said analysts.
According to research done by property agency ERA, 27,000 flats hit the five-year mark in 2019, while 26,000 did so in 2020. This is triple the 10-year annual average of 9,000 flats from 2008 to 2018.
ERA’s head of research and consultancy Nicholas Mak said that 21.1 per cent of resale flats sold between January and August this year were six years old or younger, compared to 15.5 per cent of such flats that were sold in the whole of 2019.
In contrast, this proportion was only 3.9 per cent of total transactions in 2015.
Analysts said that other factors which may have contributed to the resale market’s rebound include the new housing grant announced in September 2019, the delay in completion of Build-to-Order flats due to disruptions in the construction sector resulting from Covid-19, and buyers looking for a more affordable option given the uncertain economic outlook.
Ms Sun expects HDB resale prices to increase by 1.5 per cent to 3.5 per cent for the whole of 2020, with 20,000 to 23,000 units changing hands, while Mr Mak expects prices to rise between 2.5 and 3.5 per cent for the year, with 23,000 to 24,000 units sold.
Ms Wong Siew Ying, head of research and content at property firm PropNex, projects HDB resale prices to rise by 2.5 to 3 per cent.
Based on analysts’ estimates, HDB resale prices for 2020 will possibly rise at their fastest pace in eight years since the 6.4 per cent full-year growth in 2012.
Mr Mak said there are plenty of opportunities for buyers looking to enter the market with more newer flats reaching their five-year mark, but it depends on individual needs and circumstances, such as one’s financial means.
Ms Wong said the low interest rate environment, coupled with the housing grants provided by the Government, would mean that it is a good time for buyers interested to purchase a flat. This, however, depends on buyers finding a unit that meets their budget and other requirements.
PRIVATE RESIDENTIAL PROPERTY
Separately on Friday, the Urban Redevelopment Authority third quarter data revealed that prices of private residential property went up by 0.8 per cent compared with the previous quarter.
This was higher than the 0.3 per cent increase in the previous quarter.
The price increase was largely driven by projects in the rest of central region, with prices going up by 2.5 per cent compared with the previous quarter.
Excluding executive condominiums, 3,517 private homes were sold in the third quarter, compared to just slightly over 1,700 in the previous quarter.
Source: TodayOnLine 23rd October 2020