Chart of the Day: HDB resale prices hit 40-month low in November

Prices have declined 9.8% since April 2013 peak.

The government has been able to fundamentally change both supply and demand in the HDB market whereas it has only changed demand on the private resale side, according to SRX property chief technology officer Jeremy Lee. This is turn has resulted in HDB prices declining more than the falling in prices of private resale flats.

The SRX HDB Price Index shows that HDB resale prices in November 2014 hit a 40-month low since August 2011. Year-on-year, prices have dropped 6.3% from November 2013. Also, prices have declined 9.8% since the peak in April 2013.

Here’s more from SRX:

From this year to 2016, MND expects 6,000 HDB upgraders to take the keys to their BTO flats each year. This number is twice that of last year. The upgraders must sell their existing HDB flats within six months of getting their BTO keys. The net result is that there is more supply in the HDB resale market.

There is a second way BTOs impact prices of HDBs. The government decoupled BTO pricing from the resale market resulting in lower BTO prices. 

As such, the BTO policy accomplishes two things. It introduces more units at below market price. This causes the price decline in the HDB resale market to outpace that of the private resale market.