HDB resale price index in 2Q2018 up 0.1% q-o-q: Are we at a turning point?

By EdgeProp Singapore / EdgeProp Singapore | July 27, 2018 7:14 PM SGT
In 2Q2018, the HDB resale price index showed a 0.1% q-o-q increase, which was a marginal improvement from 1Q2018, which saw a 0.8% decline q-o-q. “The increase in the price index is so minimal that further observation in the next few months is needed to determine if this is truly the start of a market recovery,” says Nicholas Mak, ZACD Group executive director.
Since peaking in 2Q2013, the HDB resale price index has begun a continuous descent for five straight years, notes Mak. However, it appears to be bottoming out.
Concern about depleting leases of older resale HDB flats has been weighing down demand for, and prices of these older flats (Credit: EdgeProp Singapore)
Transaction volume of resale HDB flats in 2Q2018 increased 33.3% q-o-q to 5,941 flats. This could be a seasonal factor as in the past 13 years, the HDB resale transaction volume has increased in the second quarter of each year, says Mak.
The HDB is scaling back supply of new BTO (built-to-order) flats from 17,000 to 16,000 this year. The strong supply of new HDB flats in the past few years was one of the main reasons for the soft HDB resale prices as homebuying demand is drawn from the resale market to the HDB BTO flats, explains Mak. The HDB resale prices could improve marginally with a scaled-back supply of BTO flats.
Eugene Lim, key executive officer of ERA Realty notes that the concern about depleting leases of older resale HDB flats has been weighing down demand for, and prices of these older flats. On the other hand, newer flats with exceptional locational attributes continue to command a premium, with some fetching a resale price topping $1 million, he adds.
The recent private property cooling measures do not directly affect the HDB property market. It would raise the hurdle for HDB flat owners to upgrade to private residential property as the Loan-to-value (LTV) ratio for private homebuyers without other properties has been reduced from 80% to 75%, points out ZACD’s Mak.
The cooling measures however, will affect HDB buyers taking a bank loan as they will be hit by the lower LTV limits as well. “This is likely to keep HDB resale prices in check,” notes ERA’s Lim.
Newer flats with exceptional locational attributes continue to command a premium, with some fetching a resale price topping $1 million (Credit: Samuel Isaac Chua/EdgeProp Singapore)