Younger and older HDB resale flats see smaller price decline in Q3: OrangeTee

While demand for HDB resale flats remained strong in the third quarter buoyed by recent policies, the prices of younger and older flats declined quarter on quarter in Q3 2019.
While demand for HDB resale flats remained strong in the third quarter buoyed by recent policies, the prices of younger and older flats declined quarter on quarter in Q3 2019.ST PHOTO: KUA CHEE SIONG

SINGAPORE - A slower pace of price decline was observed for younger and older flats in the third quarter this year as compared to last year, OrangeTee & Tie said on Wednesday (Nov 6) in its latest quarterly report on HDB trends.

According to the report, younger flats are defined as those less than 10 years old, while older flats are those 40 years and above.

While demand for HDB resale flats remained strong in the third quarter buoyed by recent policies, the prices of younger and older flats declined quarter on quarter in Q3 2019. That said, the rate of depreciation had slowed significantly as compared to a year ago, OrangeTee noted.

For older flats, prices dipped 0.9 per cent quarter on quarter in Q3 2019, as opposed to a 3.4 per cent fall in the preceding year.

This came after policy changes this year that make it easier for buyers to get loans and grants.

In May, the government updated rules on Central Provident Fund (CPF) usage and HDB housing loans. Home buyers have greater flexibility to use their CPF to pay for the property and can get bigger housing loans as long as the remaining lease of the property can cover the buyer till the age of 95. In September, housing grants were enhanced for first-time buyers while the income ceiling was raised.

"The slower price depreciation seemed to indicate that sentiment towards older flats might have improved in recent months," the report said.

Similarly for younger flats, prices declined at a slower rate of 2.5 per cent quarter on quarter in Q3 2019, as compared to a 4.8 per cent drop in the year-ago period.

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-mature estates, which may have brought down the overall average price of younger flats in recent years. To illustrate, 81.9 per cent of younger-flat transactions in the first three quarters this year were in the non-mature 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.

"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."