SINGAPORE – Prices of Housing Board resale flats climbed for the 28th consecutive month in October, but fewer units changed hands – likely a knee-jerk reaction to the latest round of cooling measures.
HDB resale flat prices grew at a slower pace of 0.5 per cent in October, compared with September’s 1.3 per cent, according to flash data from real estate portals 99.co and SRX on Thursday. An estimated 1,965 HDB resale flats changed hands in October, down 24.1 per cent from September.
In the last year, monthly transaction volumes have been well above 2,000 units, with the only exception in February 2022 when the Chinese New Year festive lull period saw a dip in transactions to 1,904 units.
OrangeTee & Tie senior vice-president of research and analytics Christine Sun said the drop in transaction volume in October was “within expectation” as some buyers might have chosen to pull out of deals when the cooling measures hit, taking time to assess their options.
“Last month’s sales decline could have been more significant if the successful appeal cases had been excluded,” said Ms Sun, referring to the 220 private property downgraders who are now able to proceed to buy an HDB resale flat.
The exuberant HDB resale market, even in the face of rising interest rates, prompted the fresh round of property curbs aimed at cooling the public housing market.
The curbs, which include a 15-month wait-out period for private property downgraders who wish to buy an HDB resale flat and more stringent criteria in assessing home buyers’ loan amounts, kicked in on Sept 30.
Since the announcement, some private property owners who have sold their private property but have yet to complete their application to buy an HDB resale flat have found themselves in a difficult situation.
On Oct 20, HDB said it had received about 650 appeals from private property owners. Of these, 220 who had obtained an option to purchase an HDB resale flat before the cooling measures took effect had their wait-out period waived. The other 430 appeals will be assessed by HDB on a case-by-case basis.
While HDB resale prices edged up 0.5 per cent in October and were up 10.8 per cent compared with October 2021, some analysts said there appears to be some early glimpses of the impact of the cooling measures on flat prices.
Flash data showed that prices of five-room HDB resale flats remained unchanged in October from September. Prices of executive flats, which are typically sought after for their larger floor areas, dipped 1 per cent in October from September. This marks the first time prices of executive flats have dipped since July 2021.
PropNex Realty head of research and content Wong Siew Ying said: “This could possibly be an early indication of the impact of the 15-month wait-out period in reining in price growth for larger flat types, which are typically favoured by private home downgraders.”
Prices of flats in mature estates increased by 1.3 per cent, while prices of those in non-mature estates remained unchanged, data showed.
ERA Realty head of research and consultancy Nicholas Mak said this could be an indication that if HDB resale prices were to correct in the coming months, it could start in the non-mature estates.
This is because in the 2.5 years from March 2020 to the end of September 2022, the overall price growth of HDB resale flats in non-mature estates outpaced that of mature estates, he said.
“Since the prices of HDB flats in the non-mature estates had increased by a greater rate, there is more room for prices to correct. As the saying goes: The higher you climb, the harder you fall.”
Huttons Asia chief executive Mark Yip said the cooling measures were targeted at buyers of larger flats, and that the lowered demand helped to moderate the prices of these flats.
However, the curbs may divert demand to four-room and smaller flats, which may in turn prop up prices.
Mr Yip noted that a four-room flat at The Pinnacle @ Duxton was sold for $1.37 million in October, making it the most expensive four-room flat in Singapore to date.
In October, 40 HDB resale flats changed hands for at least $1 million, down from the record 45 units in September. The number of million-dollar HDB flats sold comprises 2 per cent of the total resale volume in October.
The most expensive resale flat in October was a five-room unit at The Peak @ Toa Payoh, which sold for $1.38 million.
One Global Group senior analyst Mohan Sandrasegeran said the upcoming mega launch of about 9,500 Build-To-Order flats as well as a crop of Sale of Balance flats in November may have helped draw some demand away from the HDB resale market.
Analysts expect the price growth momentum to slow in the coming months, and most expect overall price gain to be under 10 per cent in 2022.
OrangeTee & Tie’s Ms Sun said the impact of the measures is still making its way through the market and the full effect will be seen only a couple of months down the road.
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