HDB resale prices in 1Q2022 up 2.4% q-o-q, transaction volume fell 12.7%

By Hailey Yu
/ EdgeProp Singapore |
Prices grew 2.4% q-o-q, reflecting the slowest rate of growth since the height of the pandemic in 3Q2020, when prices inched up by 1.5% q-o-q (Photo: Samuel Isaac Chua/EdgeProp Singapore)
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SINGAPORE (EDGEPROP) - Public housing resale transactions dropped 12.7% q-o-q in 1Q2022, and 8.5% y-o-y to 6,934 units, according to HDB. Prices grew 2.4% q-o-q, reflecting the slowest rate of growth since the height of the pandemic in 3Q2020, when prices inched up by 1.5% q-o-q.
The December cooling measures, global market uncertainties and delays in completion of residential projects have contributed to fewer homes being put on the market for sale: “Homebuyers and HDB have adopted a wait-and-see approach,” says Lee Sze Teck, Huttons Asia senior director (research).
Still, given the tight supply, HDB resale prices are now at its peak in 1Q2022; and are 9.4% higher than the previous peak in 2Q2013, Lee adds. “The tight supply and climbing prices present a conundrum for existing homeowners who are worried that they will not be able to find a replacement home should they sell their property now,” he comments.
Wong Siew Ying, PropNex head of research and content attributes the decline in HDB resale volume in 1Q2022 largely to slower market activity over the Lunar New Year period, and the large number of Covid-19 cases possibly disrupting home viewings.
HDB resale volume from 2010 to 1Q2022 (Source: PropNex)

Price appreciation of larger flats

Last quarter, HDB prices rose 3.4% q-o-q, hence, the 2.4% increase reflects more moderate pace of price growth, notes Nicholas Mak, head of research & consultancy at ERA Realty Network. Compared to a year ago, HDB resale prices in 1Q2022 are 12.2% higher, estimates Mak. “This is about three times higher than the 4.3% y-o-y increase of the Consumer Price Index (CPI),” he points out. (Find HDB flats for rent or sale with our Singapore HDB directory)
The price growth was attributed largely to the price appreciation of larger flats, according to ERA research. In the first three months of 2022, median prices of five-room flats and Executive flats increased 2.6% and 2.8% q-o-q respectively, while median price of three-room flats rose by a smaller 2.3% q-o-q to $358,000. The median price of two-room flats remained unchanged at $280,000 over the same period.
Despite the high prices, demand for resale flats is expected to remain “relatively firm through the year”, supported by first-time homebuyers, upgraders and would-be home buyers from the Build-to-Order (BTO) pool, who are deterred by further delays in completion of BTO projects and opt for move-in ready resale units instead, reckons Wong.
The tight supply could be partially alleviated by an estimated 30,196 units that will reach the end of their Minimum Occupancy Period (MOP) in 2022, says Huttons’ Lee. He believes “a considerable number of units could be put up for sale to capitalize on the current elevated home prices”.
HDB flats at Bukit Merah Brickworks Estate - EDGEPROP SINGAPORE
HDB flats at Bukit Merah Brickworks Estate (Photo: Samuel Isaac Chua/EdgeProp Singapore)

‘Opposing factors’

ERA’s Mak anticipates “opposing factors” that will influence the HDB resale market this year: The government’s plan to push out 23,000 HDB BTO flats this year, and another 23,000 next year if necessary. “The higher supply of BTO flats could help to cool down the robust HDB resale market,” he says.
The delays and disruptions in the construction of BTO flats could gradually ease this year, and this could in turn, attract more homebuyers to turn from the HDB resale market to BTO flats instead. “These two factors could slow down the pace of HDB resale price growth,” notes Mak. “In the absence of an economic slowdown, these two factors should not cause HDB resale prices to contract,” he adds.
With close to 31,000 HDB flats reaching the end of their MOP this year (compared to 23,000 flats in the preceding year), more of these flat owners could be motivated to sell their flats then. “As these flats are newer, they usually fetch higher prices in the resale market compared to the older flats in the same neighbourhood,” Mak notes. “Their sales will contribute to the rise in the HDB resale price index.”
However, the buoyant residential leasing market could also encourage some of these flat owners to rent out their HDB flats instead of selling them, Mak continues. “This will in turn, reduce the supply of resale flats for sale, and put further upward pressure on prices,” he adds.
Rental demand is expected to increase with the return of foreign workers. While more Malaysians are expected to head home as safe management measures are further lifted, more foreign work pass holders are expected to return, says Christine Sun, OrangeTee & Tie senior vice president of research & analytics. This could in turn drive rental demand, especially in areas near the Causeway. “The northern region like Yishun, Sembawang and Woodlands, as well as the western part of Singapore like Jurong may be popular too,” adds Sun.
The northern region like Yishun, Sembawang and Woodlands, as well as the western part of Singapore like Jurong (pictured) may be popular with returning foreign workers (Photo: Samuel Isaac Chua/EdgeProp SIngapore)

‘Snowball effect’ of inflation

Inflation and rising costs could have “a snowball effect” on rents, as landlords pass on higher costs to tenants. Therefore, rents are projected to climb by 7% to 10% in 2022, while leasing volume may increase to between 46,000 and 48,000 units, notes Sun.
The upcoming BTO launch in May is likely to see more than 5,000 flats open for application, with some of the new flats located in popular locations such as Bukit Merah, Ghim Moh, Queenstown and Toa Payoh, according to OrangeTee & Tie. The Bukit Merah BTO for instance, may come under the new Prime Location Public Housing (PLH) model, which would mean an MOP of 10 years instead of the typical five years. In August, new flats will be released in Ang Mo Kio, Bukit Merah, and Queenstown. “As such, some demand may be diverted to the BTO market,” says Sun.
She anticipates HDB resale transactions to fall to a range between 25,000 and 28,000 units, with resale prices to rise at a slower pace of between 5% and 8% this year.
PropNex’s Wong is expecting HDB resale prices to rise by 6% to 8% this year, with resale volume projected to hit 28,000 to 29,000 by end of 2022.
“The steady economic growth and the easing of the COVID restrictions will strengthen homebuyers’ confidence and the expectation of further rise in property prices. “Considering all these factors, the HDB resale price index could expand 6% to 10% for the whole of this year,” according to ERA’s Mak.

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