Demand for HDB resale flats remained resilient in the third quarter this year with more than 6,000 units being transacted, buoyed by “generous incentives” and policy initiatives dished out by the government, OrangeTee & Tie said on Wednesday in its latest quarterly report on HDB trends.
Overall, HDB resale prices rose 0.1 per cent for the quarter, snapping a streak of four consecutive quarterly declines.
According to OrangeTee, HDB resale transaction data indicates that resale prices had increased across many towns, and for flats of different ages.
For instance, flats between 10 and 20 years old saw a 1.9 per cent quarter-on-quarter (q-o-q) increase in Q3 2019, higher than the 1.3 per cent q-o-q increase in Q3 2018.
For flats between 20 and 30 years old, there was a 1.2 per cent q-o-q increase in the third quarter, versus a 0.6 per cent q-o-q decline in Q3 2018.
Meanwhile, the prices of younger flats below 10 years old, as well as older flats aged 40 years and above had continued to decline q-o-q in Q3 2019, though the rate of depreciation had slowed significantly as compared with last year.
For older flats, prices fell 0.9 per cent q-o-q in Q3 2019, as opposed to a 3.4 per cent dip in the preceding year. Similarly for younger flats, prices tumbled at a slower rate of 2.5 per cent q-o-q in Q3 2019, as compared with a 4.8 per cent decline in the year-ago period.
“The slower price depreciation seemed to indicate that sentiment towards older flats might have improved in recent months,” the report highlighted.
By location, prices of resale flats had picked up in various areas across the island, OrangeTee said.
For example, prices of flats that were at least 20 years but under 30 years old in Ang Mo Kio rose 43 per cent q-o-q in Q3, while flats that were at least 10 years but under 20 years old in Jurong East increased 21.6 per cent over the same period.
At Bishan, the price of older flats above 40 years old surged 50.2 per cent q-o-q.
“Against a backdrop of growing economic uncertainties, the recent policy changes could be the positive catalysts behind the price growth of many HDB resale flats. The changes had likely spurred demand and instilled greater market confidence,” OrangeTee said.
In September, new policy measures to ensure affordable and accessible housing to all Singaporeans were announced. These include enhancements of housing grants for first-time buyers, and raising the income ceiling for those wanting to buy HDB flats.
They come on top of measures announced in the second quarter, which allow buyers to have greater flexibility in using their Central Provident Fund monies as well as bigger housing loans as long as the remaining lease of the property can cover the buyer till the age of 95.
Rising number of younger flats sold
That said, while prices had risen for many flat types, prices of younger flats (less than 10 years old) have continued to decline last quarter, albeit at a slower pace of 2.5 per cent. This price weakness was mainly due to more flats being sold within 10 years of completion in recent years, OrangeTee said.
It added that there were also more flats sold in non-matured estates, which may have brought down the overall average price of younger flats. To illustrate, 81.9 per cent of younger-flat transactions in the first three quarters this year were in the non-matured estates, as opposed to 51.5 per cent in 2015.
For the quarter, the number of younger flats sold jumped 12.4 per cent to 1,247 units, up from 1,109 units last year. This represents the highest number of new resale flats being transacted in a single quarter since Q3 2010, and was more than four times the 276 units sold in the third quarter of 2014.
“The data may indicate that more families could be ‘cashing out’ on their flats earlier to upgrade to private property or a bigger HDB flat. Some owners may have sold their flats early for fear that the value of their flats would fall with age,” OrangeTee said.
“With more flats reaching their five-year minimum occupation period, we may expect the number of younger flat transactions to rise further in the coming months. As competition for potential buyers may intensify with the rising supply of flats, there could be some downward pressure on the prices of younger flats.”