The HDB price index for resales recorded an increase of 1.5% q-o-q increase in 2Q2023, which was a boost to the 1% Q-o-Q increase that occurred in 1Q2023. This is the 13th consecutive quarter where the resale index has shown increasing prices across the market for public housing.
While prices are still rising during the beginning six months the year, the rate of price increases for resales has been a bit slower compared to 2022 which saw an average quarterly increase that was 2.5%.
J’Den land price provides CapitaLand with unparalleled proximity to major services, recreational facilities, and career opportunities.
Based on the most recent public house statistics, the average prices of executive apartments increased in 2.3% q-o-q from $800,000 in the 1Q2023 quarter to $818,000 in 2Q2023. In contrast, the prices of five-room flats increased by 1.9% from $638,000 to $650,000 during the same time.
In the depths of the data the median cost of houses increased for 18 from 26 townships. Geylang had the highest quarter-long price increase at 19.2%, followed by Ang Mo Kio at 8.4% The Central Area at 6.8% and Bukit Panjang, which was 6.1%.
The most well-known HDB towns with the most resales during the quarter included Punggol, Woodlands, Sengkang, Yishun and Bukit Batok. The five towns mentioned above comprised 37.4% of total HDB Resales in the last quarter.
Transaction volumes dip
Despite the price increase and the increase in resale transactions, overall volumes of resales decreased by 6.7% q-o-q in 2Q2023 and dropped from 6,979 flats resold in 1Q2023 to 6,514 flats in the last quarter. As per Christine Sun, senior vice-president of research and analytics at OrangeTee&Tie it was the lowest number since 2Q2020 in which 3,426 flats had been sold at the time of the break in the circuit at the time of the outbreak’s beginning.
She says: “Demand was considered resilient in the third quarter due to the fact the cooling measures that were put in place on September 20, 2022. The demand could have been bolstered through grants to first-time buyers of flats”.
Lee Sze Teck, senior director of data analytics at Huttons Asia, also concurs that the generous housing grant probably fueled demand in the during the quarter. “The doubled amount of the housing grants for resales to flat buyers led to a increase in HDB price growth for resales from 1.5% in 2Q 2023,” he says.
It could be that the slowdown in price increases so far this year may be due to government attempts to control the market with a boost the BTO supply, the reduction of the loan-to-value ratio from 80 to% and a 15-month waiting period for private property homeowners who are upgrading from the HDB flat, according to Lee.
Eugene Lim, key executive officer of ERA Realty, points out that the slow pace of price growth in the 1Q2023, as compared to 2022 is a sign of “a shift toward an upward trajectory of growth that is sustainable for HDB price resales after the hefty price hikes that have occurred in the past several years”.
“Beyond an unspecified point, buyer resistance begins to set in. If buyer and seller expectations are not in sync, expectations, transactions are more difficult to conclude, and as a result, the overall (HDB) sales volume could decrease,” says Lim. A good example is the median price for three-room HDB apartment in Bukit Batok that was $260,000 at the time of 2Q2020. However, in the last quarter the median price increased to 47% and was now $385,000.
Million-dollar flats remain to stand out, as 105 of these transactions were reported in the 2Q2023 period, which is approximately 1.6% of the total secondary market. For comparison, 103 million dollar flat transactions were recorded in the 1Q2023 period.
A new record for price was set last quarter, when a huge HDB home located in Tiong Bahru sold for $1.5 million in June. EdgeProp Singapore reported the transaction that included the sale of a 1,894 square foot unit located at 50 Moh Guan Terrace. The price of the sale is $7592 per sq ft.
But, Lee says that buyers are becoming “reluctant to pay $1.1 million, or even more, for the HDB flat. “More million-dollar flats transactions will be in the range of 1 million- $1.1 million in the 2nd quarter of 2023. Buyers could be rationalising the cost of the highest price on an HDB flat, and are opting for four-room apartments and the ratio reaches the highest level at 30.5% in 2Q 2023 as compared the figure of 21.4% in 1Q 2023,” he says.
Deep into the numbers, Lim says that there is an increase in the percentage of four-room apartments that change hands for over $1 million. “There was a noticeable increase in the percentage of four-room resales HDB flats that crossed the million dollar mark. The number increased by 20.4% in 1Q 2023 to 30.5% in 2Q 2023”.
However, five-room deals worth millions of dollars are the most popular making up 43.7% and 42.9% of flats crossing the million-dollar threshold in 1Q 2023 and 2Q 2023 respectively He says.
BTO supply to be announced BTO supply
HDB also released an update on its upcoming BTO supplies for the period 2H2023. The statutory board claims that more than 10,000 BTO flats were opened in the first half of this year. There are an additional 13,000 flats scheduled to go live in the second quarter of the year.
Next BTO sales exercise is scheduled to be held around the end of September or in early October, as opposed to the usual time of end-August due to the delayed the results of the ballot from the sales event in May. “In further, HDB will also have more time to finish the system modifications required to accommodate first-time buyers (Parents and married couples) priority category as well as other changes that are expected to be implemented in the next sales exercise” HDB says. HDB.
Therefore, the following BTO sales event will provide 6,700 flats located in towns like Chua Chu Kang, Kallang/Whampoa, Queenstown, and Tengah. The final sale of the year, which takes during December is expected to have approximately 6,300 flats for sale within Bedok, Bishan, Bukit Merah, Bukit Panjang, Jurong West, Queenstown, and Woodlands.
As we look ahead the possibility of resales could be diverted to the new BTO projects, according to Sun. She also says that first-time buyers could be enticed, as HDB will be launching flats in estates that are mature such as Kallangor Whampoa, Queenstown, Bedok along with Bukit Merah, which are generally sought-after by buyers.
“As more stricter regulations are in place for non-selections of BTO flats beginning in August 2023, the first-timer who do not get an BTO flat are likely to go to resales which will sustain demand for the second quarter of this year.” she says.
Lee states that, while stricter penalties for the non-selection of flats for applicants beginning in September 2023 BTO might divert some of the buyers to the resale market However, the development pipeline BTO projects in towns that are mature along with the shorter construction timeline could eventually sway some resale demand.
Overall, the plan of the government to bring 13,000 BTO flats on the market by 2H2023 will help in stabilising this HDB flat market according to Lim.
He also warns that HDB price resales are likely to be resilient in the future because HDB upgraders relocating into new condos in suburban areas and EC launches will face greater replacement costs and may prefer to dispose of the HDB flats at more price for resales.