HDB resale prices up 0.1% in Q3

The average price of newer flats trended higher although the same cannot be said for older flats.

After four quarters of declines, resale prices of HDB flats rose 0.1% in Q3, according to flash estimates from the Housing Development Board (HDB).

The index climbed to 130.9 points in Q3 from 139.8 in the previous quarter.

For the first three quarters of 2019, prices have dipped 0.4%. Overall, prices have fluctuated within a narrow -1 and 1 % QoQ price change for the past five years.

OrangeTee & Tie said that the price rebound is in line with expectations as market sentiment in the public housing segment has picked up significantly after a series of policy changes, which include allowing buyers to use more of their Central Provident Fund monies to buy HDB flats, enhancing housing grants for first-time buyers, and raising the income ceiling for eligible buyers.

Also read: New measures will increase stability of housing market: analysts

“We have observed many flat owners raising their asking prices as sellers expect demand for flats to recover with the recent policy changes. The increased housing grants have also raised the housing affordability for many first-timers,” noted OrangeTee & Tie.

“It is not a meaningful uptick. When we analyse the average prices paid for resale flats, the difference is very stark between newer (up to 10 years) and older (more than 30 years). The average prices for newer flats are higher quarter on quarter but for older flats, it is the reverse,” noted Sze Teck Lee, Huttons Asia’s director (research).

Based on the government’s HDB resale transactions for July and August, the average price of standard flats in 17 out of 26 towns increased in Q3 compared to Q2, particularly in Bukit Timah, Marine Parade, Bishan, Kallang/ Whampoa, Yishun, Serangoon, Bukit Merah, and Clementi.

The agency expects demand for resale flats to rise, although they do not foresee a dramatic price rebound in the coming months.

“We may not expect a dramatic price rebound in the coming months as competition for potential buyers may intensify with the increasing supply of flats reaching their five-year Minimum Occupation Period. However, we have adjusted our price projection from between -1 and -2 per cent to 0 to -1 per cent for the whole of this year,” said OrangeTee & Tie.

Similarly, Huttons expects the price index to fall by up to 0.5%, which is slightly better than 2018.

PropNex expects resale prices to remain flat for the rest of the year, although they project higher transaction volumes. “However, we are anticipating the volume of transactions to likely exceed 24,000 for the year. Subsequently, we can anticipate a positive growth in prices, in the tune of 1 to 2% for the year 2020,” said Ismail Gafoor, CEO of PropNex Realty.

HDB will offer about 4,500 Build-To-Order (BTO) flats in Ang Mo Kio, Tampines and Tengah in November. A further 3,000 BTO flats in Sembawang and Toa Payoh will be offered in February 2020.

Photo courtesy of Nicolas Lannuzel (Wikimedia Commons)