Sales of HDB resale flats hit 8-year high in 2020 as prices climb 5%

Sales of HDB resale flats reached an eight-year high in 2020.ST PHOTO: KUA CHEE SIONG

SINGAPORE – The Housing Board resale market ended 2020 on a strong note with flat prices edging up in many locations and buyer demand remaining buoyant despite the Covid-19 pandemic.

Prices of HDB resale flats rose for a third consecutive quarter, climbing 3.1 per cent in the last three months of 2020 compared with the previous quarter, according to data released by the HDB on Friday (Jan 22).

This marks the highest quarterly increase since the third quarter of 2011 when prices rose 3.8 per cent.

For the whole of 2020, prices rose 5 per cent, the steepest increase since the fourth quarter of 2012 when prices rose 6.5 per cent.

This is also higher than the 0.1 per cent price gain in 2019.

Sales of HDB resale flats reached an eight-year high in 2020 with the number of resale transactions up 4.4 per cent to 24,748 units, from 23,714 units in 2019.

The highest number on record was in 2012 when 25,094 HDB resale flats changed hands.

In the fourth quarter of 2020, resales dipped: 7,642 units were sold, 1.9 per cent lower than 7,787 units in the previous quarter. Year on year, though, sales were up 20.6 per cent from the 6,339 units sold in the fourth quarter of 2019.

Ms Christine Sun, senior vice-president of research & analytics at OrangeTee & Tie, said the rise in prices was unexpected against the economic crisis brought on by Covid-19 and a growing supply of HDB flats.

However, the slew of stimulus measures launched by the Government, such as the Jobs Support Scheme to support the economy, has helped to prop up the HDB market, she said.

“Most workers were able to keep their earnings with the help of various schemes. Some buyers were confident that they have the ability to service their housing loans and proceeded with their new home purchases,” said Ms Sun.

She noted that Singapore is now “reaping a harvest of market stability” as a result of strict measures such as the total debt servicing ratio, mortgage servicing ratio and seller’s stamp duty that were put in place over the years.

“On hindsight, these measures have sown good seeds of financial prudence and soundness in the financial system, which have prevented most buyers from over-leveraging and built a buffer against huge credit losses in times of market uncertainties,” she said.

Ms Sun said that despite the price hikes, she believes the HDB market is not at risk of a housing bubble for now.

“Typical signs of an asset bubble include the decoupling of prices from housing income, and excessive speculative buying activities… Many measures have already been put in place to prevent some of these scenarios from occurring,” she said.

She also noted that HDB resale flat prices are still 7.6 per cent below their peak in the second quarter of 2013. HDB resale prices rose for 17 continuous quarters since the second quarter of 2009 to reach that peak.

PropNex head of research and content Wong Siew Ying said the 5 per cent price growth in 2020 is likely “welcome news” for HDB flat owners as prices had fallen for six straight years from 2013 to 2018.

“Given that HDB resale home values have remained muted for some time, we think the price increase in 2020 is measured and we expect prices to potentially climb by another 3 to 5 per cent this year,” she said.

On the HDB rental market front, approved applications to rent out HDB flats increased by 3.4 per cent, from 8,196 units in third quarter of 2020 to 8,472 units in the fourth quarter of 2020.

The number of approved applications was 29.9 per cent lower than the 12,079 units approved in the fourth quarter of 2019.

At the end of 2020, a total of 59,092 HDB flats were rented out, a slight increase of 0.05 per cent over the previous quarter.

While the HDB resale market has weathered the pandemic fairly well, the same cannot be said about the HDB rental market, said ERA Realty head of research and consultancy Nicholas Mak.

For the whole of 2020, the HDB rental volume contracted 19.5 per cent year on year to 38,798 flats, the largest rate of decline since such data was made publicly available in 2006, he noted.

Said Mr Mak: “The leasing demand for HDB flats was badly affected by the slowdown in the local economy and employment market.”

“Source: [Sales of HDB resale flats hit 8-year high in 2020 as prices climb 5%] © Singapore Press Holdings Limited. Permission required for reproduction”

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