SINGAPORE - Delays in Build-to-Order (BTO) flats, rising private property prices and improving market sentiment drove demand in the Housing Board resale market, sending prices climbing for the ninth straight month.

Resale prices rose 0.8 per cent in March from the previous month, according to flash data from real estate portal SRX out on Thursday (April 8). Year on year, resale prices were up 9.5 per cent from March 2020. They are closing in on their all-time highs, with March prices 4.9 per cent lower than their peak in April 2013.

As prices have been growing at an average rate of around 1 per cent a month in recent months, based on SRX data, they may surpass the peak by the second half of this year at their current rate of growth, barring further cooling measures, said Ms Christine Sun, OrangeTee & Tie's senior vice-president of research and analytics.

Mr Nicholas Mak, head of research and consultancy at ERA, said the rising prices are due to robust demand from home buyers who prefer the certainty of getting their flats in the resale market and avoid the risk of construction delays for BTO flats.

Both Mr Mak and Ms Sun observed that cash over valuation (COV) - the cash that buyers have to fork out if the sale price exceeds HDB's valuation - has been rising in recent months.

The average COV has increased in some locations from $10,000-$20,000 to $30,000-$40,000, said Ms Sun. Rare and attractive units can currently command more than $80,000 COV in some cases, she added. "Buyers are willing to pay a higher COV as they believe that the supply of choice units is limited, especially newer flats in mature estates," she said.

PropNex head of research and content Wong Siew Ying said the sustained demand for resale flats has helped to support prices, but as asking prices keep rising, so too would price resistance on the part of some prospective buyers, who may baulk at having to pay a high COV.

This resistance to higher prices could potentially moderate the pace of price growth ahead, she said.

Indeed, going by SRX's report, the pace of monthly price increase has slowed in recent months - from 1.7 per cent in January to 1.4 per cent in February and 0.8 per cent in March.

SRX's data also showed sales picking up after the Chinese New Year lull, with 2,448 flats changing hands in March, a 13.1 per cent increase from February. March sales also were 25.6 per cent higher than the same month last year.

The bulk of sales came from four-room flats (43.3 per cent). Five-room flats accounted for the second-largest volume with 25.5 per cent, followed by three-room flats (22.9 per cent) and executive flats (7 per cent).

Ms Sun expects sales volume to pick up further with Singapore's economic recovery and construction delays for BTO flats.

At the highest end of the market, 17 resale flats were sold for at least $1 million, making up about 0.7 per cent of the total number of units resold.

The highest transacted price for a resale flat last month was $1.22 million for a five-room DBSS (Design, Build and Sell Scheme) unit at Natura Loft in Bishan Street 24.

In non-mature estates, the highest transacted price was $910,000 for a five-room premium apartment loft unit at Treelodge @ Punggol.

The total of 53 million-dollar resale flats sold in the first quarter of 2021 was a 308 per cent increase compared with 13 such units sold for the same period in 2020.

For the overall market, Mr Mak said that HDB resale prices could increase 7 per cent to 10 per cent in 2021.

"The factors that exerted upward pressure on resale prices in the past nine months could persist for the rest of this year, he said.

These include the uncertainty and expected delay in the completion of new HDB flats. The Government announced on Wednesday that some 85 per cent of BTO projects are around six to nine months behind schedule, meaning about 43,000 households will get the keys to their flats late, because of construction delays caused by manpower shortages and supply chain disruptions.

Mr Mak also noted that another 26,000 new HDB flats will reach the end of the five-year minimum occupation period this year and become eligible for resale. The transactions of these younger flats would contribute to the rise in HDB resale prices, he said.

PropNex's Ms Wong said: "In the near term, we anticipate demand for resale flats to stay relatively healthy on the continued improvement in market sentiment, as well as the optimism arising from the projected rebound in the Singapore economy this year.

"That said, we remain watchful of policy risk and any potential impact on the HDB resale segment, as the authorities monitor price trends in the property market."