HDB’s latest flash estimates showed the 2Q2019 Resale Price Index declined by 0.2% q-o-q. This is the fourth consecutive decline and HDB prices have declined by 0.7% over the last one year.
However, prices have fluctuated within a -1% to 1% q-o-q change over the past 18 quarters, indicating that resale prices have stabilised, points out Christine Sun, head of research and consultancy at OrangeTee & Tie.
HDB resale prices have moderated as competition for buyers has intensified with more flats being placed on the market in recent months. Many owners will be looking to upgrade their properties once their flats are eligible for resale, says Sun. She expects about 30,000 HDB flats will reach their five-year Minimum Occupation Period this year.
But Ismail Gafoor, CEO of PropNex Realty, says that despite the property cooling measures in place, the public housing segment “has demonstrated a continuation of strong demand, especially in terms of volume of transactions”.
This is evident from the 4,835 HDB resale transactions in the first quarter of the year, which saw a surge of 8.5% y-oy. Most buyers are newly-married couples, and some are en-bloc beneficiaries who choose to downgrade and are buying HDB resale flats as immediate replacement homes, he says.
Eugene Lim, key executive officer of ERA Realty Network, says concerns among owners and buyers about the value of ageing HDB flats, as well as competition from the steady supply of relatively cheaper BTO flats, continue to weigh down overall HDB resale prices.
The effects of the latest change in CPF usage rules for purchasing leasehold residential properties – affecting private and public sales – have yet to be seen in the resale HDB market, as it is still early days for this major policy change, says Nicholas Mak, head of research and consultancy at ERA.
Mak adds: “The revised CPF policy favours middle-aged HDB homeowners who may want to buy older resale HDB flats to live near their parents. We believe it may have a positive impact on the resale market once more HDB buyers understand how to utilise their CPF under the new rules.”
He also expects the recovery in private residential prices to slow down the decline in HDB resale flat prices, “as the widening gap between the prices of private housing and HDB resale flats could attract some buying demand to resale public housing”.
HDB also announced that it will offer 3,300 BTO flats in Punggol and Tampines in August, and about 4,500 flats in Ang Mo Kio, Tampines, and Tengah in November. This will run concurrently with a Re-offer of Balance Flats exercise and a Sales of Balance Flats exercise.
HDB resale prices may face further downward pressure from the increasing supply of flats in the coming months, OrangeTee’s Sun says. She expects HDB resale prices to fall by between 1% and 2% this year.
In contrast, Gafoor believes that “we may well experience a positive growth in the second half of the year, with 2019 ending with up to 1% growth”, as HDB prices have fallen at a relatively slower and more stable pace over the last three quarters.