HDB resale prices expected to dip after latest 2.4% rise in Q3

Prices of Housing Board resale flats climbed in the third quarter of 2022 for the 10th consecutive quarter, their surge this year having prompted fresh property curbs to cool the public housing market.

HDB resale prices rose at a slower pace of 2.4 per cent in the July to September quarter, compared with 2.8 per cent in the second quarter, flash estimates from HDB on Monday showed.

However, analysts said prices are expected to dip in the coming months after the latest cooling measures kicked in on Sept 30. The curbs come as hot money from private property downgraders flowing into the HDB resale market, coupled with pandemic-linked disruptions in construction, helped fuel a 7.8 per cent rise in HDB resale prices in the first nine months of 2022.

OrangeTee & Tie senior vice-president of research and analytics Christine Sun said a "stronger market reaction" is expected as the curbs mark one of the most significant cooling measures imposed on the public housing market in recent times. This is because almost all home buyers, including those buying upcoming Build-To-Order (BTO) flats, are affected by the tighter borrowing limits and more stringent total debt servicing ratio and mortgage servicing ratio.

Private property downgraders shopping on the upper end of the HDB resale flat market will likely face the biggest hurdle due to the 15-month wait-out period imposed on this group, said Ms Sun. "There will likely be a temporary pullback in demand for large flats, which may result in a price correction in the coming months," she added.

The latest curbs come just nine months after the last tranche of measures that had been aimed at the private property market.

As interest rates have risen significantly and are likely to continue rising, the authorities said the measures will ensure home buyers borrow within their means and moderate demand in the property market.

The number of million-dollar HDB resale flats, which has steadily gone up since 2021, is expected to ease off. To date, 277 HDB resale flats have changed hands for at least $1 million in the last nine months, compared with 259 for the whole of 2021. Such deals have also popped up in non-mature estates such as Bukit Batok and Punggol, prompting concerns over home affordability.

One Global Group senior analyst Mohan Sandrasegeran said: "The momentum of million-dollar deals is likely to see signs of slowing down in the fourth quarter, and it would be a crucial factor that will eventually lead to slower velocity of price change."

Huttons Asia senior director of research Lee Sze Teck said buyers of these million-dollar flats are increasingly turning their attention to five-room and large unit types for the spacious floor area. For instance, there were 75 such flats sold in the first quarter, compared with 105 in the third quarter of 2022, he added.

On the flipside, demand for smaller three-room and four-room flats may go up in the coming months.

"For downgraders aged 55 and up, they may still purchase a four-room and smaller HDB flat without restrictions, so some demand may flow to four-room flats and push up prices," said Mr Lee, adding that he expects the overall HDB resale price gain for the whole of 2022 to be no more than 10 per cent.

Analysts said the upcoming mega BTO launch in November will likely draw some demand away from the resale market, especially among first-time buyers. HDB will offer about 9,500 BTO flats in towns such as Bukit Batok, Kallang/Whampoa, Queenstown, Tengah and Yishun.