SINGAPORE – Prices in the Housing Board (HDB) resale market edged up for the 10th consecutive quarter, with price growth slowing amid inflation and rate hikes.
Resale prices rose at a slower pace of 2.6 per cent in the third quarter of 2022, compared with 2.8 per cent in the second quarter, data released by HDB on Friday showed.
Property analysts said that the slower price growth reflects economic conditions – buyers may be less willing to pay more for a home due to rising expenditure.
OrangeTee & Tie senior vice-president of research and analytics Christine Sun said: “Rising inflation will limit what buyers can afford, especially middle- and lower-income Singaporeans who form the bulk of purchasers.”
In the wake of property cooling measures that kicked in on Sept 30, analysts expect prices to moderate further in the last quarter of the year and fewer million-dollar deals to go through.
Sales will slow in the immediate term as buyers and sellers recalibrate their expectations following a lower loan-to-value (LTV) limit for HDB loans, said PropertyGuru Singapore country manager Tan Tee Khoon.
The property curbs had tightened the LTV for HDB loans from 85 per cent to 80 per cent, and introduced an interest rate floor of 3 per cent for HDB loan eligibility letter applications from Sept 30. Private home owners who wish to buy HDB resale flats are now subject to a 15-month wait after selling their homes.
However, Huttons Asia senior director of research Lee Sze Teck noted that prices of four-room flats may be pushed up as private property owners who are at least 55 years old can purchase a four-room or smaller resale flat without restrictions.
A total of 7,546 HDB resale flats changed hands in the third quarter of the year, up by 10.7 per cent from 6,819 in the previous quarter, reversing three quarters of declining transactions.
One Global Group senior analyst Mohan Sandrasegeran said this could be attributed to buyers seeing the fixed interest rates offered under HDB loans as a safe option.
“The booming HDB resale market likely led to more sellers having confidence to list their flats for sale, knowing that there is underlying demand that would result in hopeful buyers eventually picking up their units,” he added.
Compared with the third quarter of 2021, when 8,433 resale flats were sold, resale transactions were 10.5 per cent lower.
The third quarter saw 111 HDB resale flats changing hands for at least $1 million, up from the 83 in the previous quarter.
Noting that this was the highest number of million-dollar flats transacted in a quarter, Dr Tan said private home downgraders turned to the HDB resale market because of high private property prices.
“These buyers are likely to turn towards non-mature estates, which are farther away from the city centre but more affordable than their city-fringe counterparts,” he said.
Mr Lee added that the million-dollar transactions this year showed that buyers prioritise space, as the deals comprised more five-room and larger flats compared with those in 2021.
According to HDB data, executive apartments in Bishan were the most expensive in the third quarter, with a median price of $1,045,000. The median figure for the mature estate was not given in the previous quarter, as there were fewer than 20 transactions.
This was followed by Queenstown, where the median price of a five-room flat was $894,000, rising from $875,000 in the previous quarter. In the first quarter of this year, the median price of five-room flats in Queenstown had reached a peak of $952,000.
HDB data did not provide the third-quarter median resale price of five-room flats in the central area, which covers The Pinnacle@Duxton. But the median price of a four-room flat in the area fell from $964,000 in the second quarter to $680,000 in the third quarter.
Ms Sun said she expects the HDB resale market to continue to be attractive in the long term, even with the cooling measures.
“Past trends indicate that our property market is highly resilient and usually rebounds within six months of a cooling measure,” she said.
In the HDB rental market, more flats were leased in the third quarter of this year, up slightly by 0.6 per cent to 56,372 units, compared with 56,014 in the previous quarter.
The number of approved applications to rent out HDB flats fell by 12 per cent to 8,192 cases in the third quarter of this year, from 9,309 in the previous quarter.
HDB said it will launch up to 23,000 Build-To-Order flats in 2023 and monitor housing demand to adjust plans as needed.
In November, it will roll out about 9,500 BTO flats in towns such as Bukit Batok, Kallang Whampoa, Queenstown, Tengah and Yishun.