SINGAPORE (EDGEPROP) - The latest statistics from HDB show that there were 7,787 transactions in 3Q2020, marking a 127.3% increase from the previous quarter, which saw just 3,426 resale transactions, as well as a 24.3% y-o-y increase.
Christine Sun, head of research & consultancy at OrangeTee & Tie (OTT), says: “Singapore’s public housing market posted a stunning rebound last quarter after clocking historically low sales in 2Q2020 when house viewings were barred during a two-month circuit breaker in April and May.”
The turnaround in the resale market was likely fuelled by the government’s strong intervention through various financial assistance schemes such as loan deferments, that helped prevent widespread mortgage defaults and supported HDB flat prices from tumbling, Sun adds.
The latest statistics also indicated that the HDB resale price index for 3Q2020 climbed 1.5% from the previous quarter. HDB resale flat prices at the end of 3Q2020 were 2.3% higher y-o-y, and over the first three quarters of this year, resale prices have increased by 1.8%.
This has exceeded the expectations of OTT which expected prices to either fall by 2% or marginally increase by 1% over the whole of 2020. “The increase in prices could possibly be attributed to many newer HDB resale flats being sold last quarter. As newer flats tend to command higher prices than older ones, the overall price index could have been ‘uplifted’ by the newer flats,” says Sun.
She adds that some sellers may have raised their asking prices as they sensed a pick-up in housing demand in the HDB resale market in recent months.
According to Nicholas Mak, head of research & consultancy at ERA Realty, 21.2% of resale HDB flats sold in the first eight months this year were six years old or younger on their transaction date. In comparison, the number of such new flats sold in 2015 accounted for only 3.9% of the total number of transacted sales over the same period, he says.
Lee Sze Teck, director of research at Hutton Asia, says that the supply of resale flats in 3Q2020 was lower than expected as some sellers held back from selling their properties due to the six-month extension from additional buyer’s stamp duty remission from the government. “As a result, there were slightly more buyers than sellers in 3Q2020 and competition for resale flat increased, resulting in higher prices,” says Lee.
Sun had expected the performance of the HDB resale market in 3Q2020 to reflect a long and arduous recovery on the back of the market disruption caused by the circuit breaker as well as the depth of the economic disruption caused by the pandemic.
But she is still cautious, saying: “The dawn of a market recovery may not have arrived yet as a confluence of economic challenges remain – the risk of a global economic slowdown, a grim employment outlook and the adverse impact of the withdrawals of government support measures for businesses. Nevertheless, tailwinds from low-interest rates may prop up sales and sustain prices in the near term.”
Mak expects the HDB resale price index to rise by 2.5% to 3.5% y-o-y for the whole of 2020, and the market could record about 23,000 to 24,000 resale HDB transactions. There were 23,714 resale transactions last year.
“In the next 12 to 18 months, a large number of new flats will reach their five-year minimum occupancy period (MOP) and will be able to support HDB price growth. An estimated 26,000 new HDB flats will reach the end of their MOP period in 2021, which is about the same number as in 2020, and the effects of these new HDB flats on the resale market would continue into 2022,” says Mak.
He expects the HDB resale price index could potentially expand by 3% to 5% in 2021, barring any unexpected market shocks.
In addition, HDB says that it will offer about 9,300 Build-To-Order (BTO) flats in various housing estates during the November 2020 and February 2021 BTO exercise.