SINGAPORE - Housing Board flat resale transactions took a plunge in the second quarter of 2020 in light of the circuit breaker measures.
The number of resale transactions fell by 41.9 per cent, from 5,893 flats sold in the first quarter of 2020 to 3,426 flats in the second quarter, according to data from the HDB on Friday (July 24).
Compared to the same period in 2019, resale transactions in the second quarter of 2020 were 45.4 per cent lower.
Singapore's circuit breaker period, where strict safe distancing measures were put in place, lasted from April 7 until June 1.
Noting that last quarter's resale volume was the lowest quarter sales on record since 2007, OrangeTee & Tie's head of research and consultancy Christine Sun said the decline could be attributed to the tighter safe distancing measures imposed during the circuit breaker which prevented physical house viewings from being carried out.
"Even with the use of virtual home tours, augmented reality and e-open houses, some buyers face difficulty overcoming the psychological barrier of sealing the deal without first inspecting the unit in person.
"Most buyers would still prefer to assess the condition of the flat and have a better visualisation of the unit layout before making a purchase."
The prices of the resale flats inched up slightly with the resale price index at 131.9, up 0.3 per cent from the previous quarter.
The prices rose marginally after staying flat in the first quarter of the year.
Ms Sun called this surprising since the prices of resale flats fluctuated more dramatically in past crises.
She listed as examples the Asian Financial Crisis when the HDB resale price index plunged over nine successive quarters between 1996 and 1999, the Sept 11, 2001 attacks when prices fell for eight consecutive quarters between 2000 and 2002, as well as the 2008 Global Financial Crisis when prices slipped in 2009.
"As of now, the four rounds of aggressive stimulus packages unleashed by the Singapore Government seem effective in preventing a housing market meltdown or property price collapse. Currently, prices of flats seemed to be holding firm with no apparent panic selling islandwide," she said.
Over in the HDB rental market, transactions also took a hit.
The number of approved applications to rent out HDB flats fell by 9.1 per cent, from 11,591 applications in the first quarter of 2020 to 10,539 in the second quarter.
Compared to the same period in 2019, the number of approved applications in the second quarter of 2020 was 14.6 per cent lower.
In total, as at the end of the second quarter of 2020, there were 57,693 HDB flats rented out, a 0.1 cent increase over the previous quarter when there were 57,652 units rented out.
The HDB said that it will offer about 7,800 Build-To-Order (BTO) flats in Ang Mo Kio, Bishan, Choa Chu Kang, Geylang, Pasir Ris, Tampines, Tengah and Woodlands in August.
Another 5,700 flats in Bishan, Sembawang, Tampines, Tengah and Toa Payoh will be available in November.
Of these, the flats in Choa Chu Kang, Tampines North and Tengah will have a shorter waiting time.
Looking ahead, Ms Sun said the demand for HDB resale flats may return to some normalcy in the coming months, as house viewings have resumed fully and market confidence is returning.
"At this juncture, a significant price correction is rather remote unless the global health crisis spirals out of control and our unemployment number creeps up significantly.
"Nonetheless, a supply overhang with many HDB flats reaching their five-year Minimum Occupation Period may continue to exert downward pressure on prices. The overall resale price could range between -2 and 1 per cent this year," she said.
ERA Realty's head of research and consultancy Nicholas Mak predicts there could be more headwinds in the economy and employment market leading to lower HDB resale volume.
However, this could be balanced out by the large number of new flats that could enter the resale market having reached the end of their five-year minimum occupation period.
"Some of these newer flats will be sold in the resale market at relatively higher prices than the older flats in the vicinity. Their transacted prices will contribute to the growth in the resale price index," he said.