HDB resale prices fall 0.3% in third consecutive decline

/ EdgeProp
April 26, 2019 3:52 PM SGT
HDB resale prices declined by 0.3% q-o-q in the first quarter of this year, compared to the 0.2% q-o-q decline in the previous quarter, according to the latest statistics by the Housing and Development Board (HDB).
This is the third consecutive quarterly decline in HDB resale prices, but the cumulative decrease over the past nine months is about 0.5%, lower than the 0.8% fall that was recorded just in 1Q2018, says Christine Sun, head of research and consultancy at OrangeTee & Tie. “This may indicate that HDB resale prices have largely stabilised and buying sentiment has remained resilient.”
As close to 30,000 HDB and Design, Build and Sell Scheme (DBSS) flats reach their Minimum Occupancy Period (MOP) this year, coupled with fewer Build-To-Order (BTO) flats coming onto the market, “we can expect demand to be invigorated in the next three quarters of 2019”, says Ismail Gafoor, CEO of PropNex Realty. “Furthermore, without the cash over value (COV), HDB resale flats will continue to serve as a desirable option as a matrimonial home for newly-wed couples.”
Policy changes that allow buyers to tap more of their Central Provident Fund savings to purchase older flats may also increase their attractiveness, and spur demand for them. All of this will add to an overall uplift in the HDB resale price index this year, says Sun.
However, she cautions that the increase in supply of resale flats could offset some of the positive impact on resale prices, and may even result in downward pressure for some flats. The overall price index could “flatline” this year as a result of price stabilisation, she adds.
HDB rental market
1Q2019 also saw approved applications to rent out HDB flats climb 2.6% to 11,775 flats, and this is 0.5% higher y-o-y.
More than 5,000 jobs are expected to be generated from the expansion of the two integrated resorts, and close to a third will be filled by foreigners, which will help buoy the HDB rental market, says Sun. The peak rental period usually occurs in the second and third quarters of the year, she adds.
Resale transactions
Resale transactions declined by 14.2% over the last three months, from 5,637 cases in 4Q2018 to 4,835 cases. The result is “within expectations”, says Sun, as the number of resale transactions during the first three months of the year is usually the lowest. This is due to the seasonal lull stemming from the year-end holidays and the Chinese New Year period.
“We expect an increase in transactions in the coming months, especially for flats built under the DBSS and those located in mature estates, as these flats are usually in high demand,” she says.
Revitalisation plans outlined in the Draft Master Plan 2019 include new community spaces, amenities, business and housing hubs, as well as new transport networks. These initiatives improve the liveability for many existing HDB estates, and enhance their attractiveness to spur long-term buying interest, she says.
Meanwhile, the HDB resale transaction volume is expected to reach 24,000 to 25,000 this year, and the resale price index could range from a fall of 1% to a 2% increase for the whole of 2019, says Gafoor of PropNex Realty.
In May, HDB will offer 3,400 BTO flats in the Kallang-Whampoa, Tengah, and Woodlands neighbourhoods, and a Sale of Balance Flats exercise will be held concurrently.