SINGAPORE – Prices of Housing Board resale flats have climbed for the ninth consecutive quarter to new highs, though there are signs that a degree of buyers’ price resistance is setting in as the market stabilises.
HDB resale flat prices rose by 2.6 per cent in the second quarter of the year at a slightly faster pace compared with the 2.4 per cent increase in the previous quarter, according to HDB’s flash estimates released on Friday (July 1).
Some analysts said it was a sign the HDB resale market could be losing its momentum, as quarterly price gains this year have stayed around 2.5 per cent, compared with 3 per cent last year.
Huttons Asia senior director of research Lee Sze Teck said the second quarter of the year is usually the busiest, as market activities bounce back after a seasonal festive lull in the first quarter, but figures show a dip in sales volume.
PropNex Realty head of research and content Wong Siew Ying said the lower resale volume could also have been due to limited supply, a mismatch in price expectations between buyers and sellers, and the cooling of buying demand following robust sales last year.
In addition, the attractive locations – including two under the prime location public housing model – in May’s Build-To-Order sales exercise could have siphoned off some demand from the HDB resale market, said Ms Wong.
An estimated 6,475 flats were transacted in the second quarter of this year, down from the 6,934 flats in the first quarter, said Mr Lee.
The estimated total price increase for the first half of the year now stands at 5.1 per cent, compared with 6 per cent in the same time period last year.
Ms Wong expects HDB resale prices to climb this year, albeit at a slower pace of 7 per cent to 9 per cent, compared with the 12.7 per cent full-year increase in 2021.
In the longer term, any further increase of mortgage rates could also impact some buyers who have taken up bank loans, although to a smaller degree compared with private property owners.
This is because the loan quantum for most HDB flats tends to be smaller than the one for private properties and Singapore’s public housing market is usually less susceptible to macroeconomic fluctuations, unlike investment properties, said Ms Christine Sun, senior vice-president of research and analytics at OrangeTee and Tie.
“However, the impact may be more keenly felt when bank home loan rates move above 3.5 per cent. When interest rates for home loans are high, borrowers may be reluctant to spend too much on their flats since buyers are faced with less affordability and lower borrowing power,” said Ms Sun.
As a result, demand for HDB resale flats may moderate when more buyers turn cautious in their home purchases, she added.
However, analysts noted that there would be some buyers with more cash on hand who continue to chase after the limited supply of bigger HDB resale flats, such as executive maisonettes and Design, Build and Sell Scheme flats.
Mr Lee noted that an estimated 165 HDB resale flats have changed hands for at least $1 million in the first half of this year.
The number of such million-dollar resale flat deals – if continued at the current trajectory – is expected to exceed the 259 transactions of last year, he added.
“Source: [HDB resale prices climb 2.6% in Q2; signs of market stabilising: Flash data] © Singapore Press Holdings Limited. Permission required for reproduction”