HDB resale prices rise 2.1% in Q4, slower increase likely due to cooling measures

In 2022, HDB resale prices rose an estimated 10.3 per cent, down from a record 12.7 per cent in 2021. PHOTO: ST FILE

SINGAPORE – Prices of Housing Board resale flats grew at a slower pace of 2.1 per cent in the fourth quarter of 2022, a sign that prices may be moderating following a round of property curbs in September aimed at cooling the public housing market.

In 2022, HDB resale prices rose an estimated 10.3 per cent, down from a record 12.7 per cent in 2021, but still above the 5 per cent rise recorded in 2020, flash estimates from HDB on Tuesday showed.

The 2.1 per cent price growth from October to December marked the second consecutive quarterly price slowdown, following the 2.6 per cent rise seen in the third quarter of 2022.

Overall, HDB resale prices have risen for 11 consecutive quarters, spotlighting the issue of housing affordability in recent months.

Property analysts said the modest price growth in the fourth quarter of 2022 was likely due to the cooling measures, which have made some buyers unable to proceed with their buying plans or caused them to rethink their purchases, along with the rising interest rate environment.

OrangeTee & Tie senior vice-president of research and analytics Christine Sun said fewer large flats, which typically command higher prices and prop up the resale prices, were sold in the last quarter.

The proportion of five-room, executive and multi-generation flats that changed hands dipped from 2,392 units, or around 33 per cent, in the third quarter of 2022 to 1,876 units, or around 30 per cent, in the fourth quarter.

This could be due to a curb imposed on private property downgraders, who have to wait 15 months after selling their private home before they can buy an HDB resale flat, as part of cooling measures that kicked in on Sept 30. This group of buyers typically has a bigger budget and prefers larger HDB resale flats.

Other measures include limiting how much buyers can borrow for their home loans and a more stringent total debt servicing ratio and mortgage servicing ratio.

Huttons Asia senior director of research Lee Sze Teck said the number of HDB flats sold for at least $1 million appeared to have slowed down in the last quarter after such deals gained traction in 2021 and the first three quarters of 2022.

HDB data showed that an estimated 91 such flats were sold in the fourth quarter of 2022, down from the 111 units in the previous quarter.

One Global Group senior analyst Mohan Sandrasegeran said: “Despite the marginal dip, the cooling measures that were implemented in September are beginning to have the impact that they were designed to have.”

In 2022, the transaction volume of HDB resale flats dipped by 9.7 per cent to an estimated 27,773 units, down from 30,769 units in 2021.

Mr Sandrasegeran noted that fewer flats changed hands in the last quarter as the mega launch of almost 10,000 Build-To-Order (BTO) flats in November might have drawn some buyers away from the resale market.

OrangeTee’s Ms Sun said more time is needed for prices to fully reflect the impact of the cooling measures.

However, she said that housing supply in the resale market is expected to remain tight over the next few years.

This is because the number of flats that will complete the minimum occupation period to hit the resale market will drop significantly from 31,325 units in 2022 to 15,748 units in 2023, before falling further to 13,093 units in 2024 and 8,234 units in 2025.

“Although supply will fall in 2023, prices are not expected to rise extensively, given the cooling measures. Some buyers may also hesitate to pay too much for a flat when mortgage rates continue to climb,” said Ms Sun.

She expects HDB resale prices to grow at a slower pace of 5 per cent to 8 per cent in 2023.

In 2022, HDB launched a total of 23,184 BTO flats for sale, and it plans to offer up to 23,000 BTO flats in 2023 to meet housing demand.

In February, about 4,400 BTO flats in towns including Jurong West, Kallang/Whampoa, Queenstown and Tengah will be launched.

Between 3,800 and 4,800 BTO flats in towns such as Bedok, Kallang/Whampoa, Queenstown, Serangoon and Tengah will be offered in May.

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