HDB resale prices climb 5% in 2020, as sales hit 8-year high

Buyer demand buoyant despite pandemic, but HDB rental volume hit by lower demand

Sales of HDB resale flats reached an eight-year high in 2020.
Sales of HDB resale flats reached an eight-year high in 2020.ST PHOTO: KUA CHEE SIONG

The Housing Board resale market ended 2020 on a strong note, with flat prices edging up in many locations and buyer demand remaining buoyant despite the Covid-19 pandemic.

Prices of resale flats rose for a third consecutive quarter, climbing 3.1 per cent in the last three months of last year compared with the previous quarter, according to data released by HDB yesterday.

This marks the highest quarterly increase since the third quarter of 2011, when prices rose 3.8 per cent.

For the whole of last year, prices rose 5 per cent, the steepest increase since 2012, when prices rose 6.5 per cent.

In 2019, flat prices had gone up by just 0.1 per cent.

Sales of HDB resale flats reached an eight-year high last year, with the number of resale transactions up 4.4 per cent to 24,748 units, from 23,714 units in 2019.

The highest number on record was in 2012, when 25,094 HDB resale flats changed hands.

In the fourth quarter of last year, the number of resale flats sold dipped: 7,642 units changed hands, 1.9 per cent down from the 7,787 units in the previous quarter. Year on year, though, sales were up 20.6 per cent from the 6,339 units sold in the fourth quarter of 2019.

Ms Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, said the rise in prices was unexpected against the economic crisis brought on by Covid-19 and a growing supply of HDB flats.

But the slew of stimulus measures launched by the Government to support the economy, such as the Jobs Support Scheme, may have helped to prop up the HDB market, she said.

"Most workers were able to keep their earnings with the help of various schemes. Some buyers were confident that they have the ability to service their housing loans, and proceeded with their new home purchases," said Ms Sun.


She noted that Singapore is now "reaping a harvest of market stability" as a result of strict measures such as the total debt servicing ratio, mortgage servicing ratio and seller's stamp duty that were put in place over the years.

Ms Sun said that despite the rising prices, she believes the HDB market is not at risk of a housing bubble for now.

"Typical signs of an asset bubble include the decoupling of prices from housing income, and excessive speculative buying activities... Many measures have already been put in place to prevent some of these scenarios from occurring," she said.

She also noted that HDB resale flats' prices are still 7.6 per cent below their peak in the second quarter of 2013. HDB resale prices had risen for 17 continuous quarters since the second quarter of 2009 to reach that peak.

On the HDB rental market front, approved applications to rent out HDB flats increased by 3.4 per cent from 8,196 units in the third quarter of last year to 8,472 units in the fourth quarter.

But the number of approved applications was 29.9 per cent lower than the 12,079 units approved in the fourth quarter of 2019.

At the end of last year, a total of 59,092 HDB flats were being rented out, a slight increase of 0.05 per cent over the previous quarter.

While the HDB resale market has weathered the pandemic fairly well, the same cannot be said about the HDB rental market, said ERA Realty head of research and consultancy Nicholas Mak.

HDB rental volume for leases that started last year contracted 19.5 per cent year on year to 38,798 flats, the largest rate of decline since such data was made publicly available in 2006, he noted.

Mr Mak said: "The leasing demand for HDB flats was badly affected by the slowdown in the local economy and employment market."

A version of this article appeared in the print edition of The Straits Times on January 23, 2021, with the headline 'HDB resale prices climb 5% in 2020, as sales hit 8-year high'. Subscribe