HDB resale transactions jumped 29.8% in Q2

Changes to the CPF may have stoked demand for HDB resale flats.

Housing and Development Board (HDB) resale flat transactions climbed 29.8% QoQ to 6,276 units in Q2 from 4,835 units in Q1, data from HDB revealed.

Also read: HDB resale prices dipped 0.3% in Q1

On a YoY basis, the figures rose 5.6% compared to Q1 2018. Data also suggest that a total of 11,111 HDB flats were resold in H1, an increase of 6.8% YoY compared to the 10,399 units resold in H1 2018.

“Whilst the second quarter usually sees an uptick in sales activity and more units changing hands, resale transactions have also spiked on a year-on-year basis. This indicates that apart from a seasonal effect, the recent Central Provident Fund (CPF) changes may have been a major catalyst that has spurred the buying demand last quarter,” Christine Sun, OrangeTee & Tie head of research and consultancy said.

Sun believes that the policy changes may bring back demand for older flats in the coming months, which will benefit the many owners of older flats that have been struggling to find a suitable buyer since the start of the lease decay debate.

Also read: Older flats defy depreciation concerns as sales hit record high in Q1

“After the policy changes in May, we have observed an increase in sales inquiries and a greater buying interest for older flats recently. Some potential buyers who desire to live near their parents in mature estates may now be able to obtain a housing loan or to fully utilise their CPF to buy an older flat in the vicinity under the new regulation. These buyers could have faced loan restrictions previously as the ability to obtain a loan is dependent on the age of the flat. Now the criteria have changed such that the age of the buyer is being taken into consideration together with the balance lease of the flat,” she explained. 

Also read: Old HDB flats weather depreciation better than condos

Meanwhile, HDB Resale Price Index (RPI) fell 0.2% to 130.8 in Q2 from 131 in Q1. “Whilst sales volume may continue to trend upwards in the coming months, a price recovery may not be as quick given the increasing supply of HDB resale flats. Given the influx of HDB flats reaching their five-year minimum occupation period this year and potentially more sellers vying for buyers, prices of flats may continue to face downward pressure for some locations,” Sun said.

HDB also revealed that the number of approved applications to rent out HDB flats grew 4.8% QoQ and 2.6% YoY to 12,335 units. Sun thinks that this is within expectations as the second quarter of the year is usually a peak rental season and more flats are now eligible to be leased after reaching their five-year MOP.

The agency said that it will offer about 3,300 Build-To-Order (BTO) flats in Punggol and Tampines in August and about 4,500 BTO flats in Ang Mo Kio, Tampines and Tengah in November.