SINGAPORE - The resale prices of Housing Board flats climbed for the sixth consecutive quarter to exceed their previous peak in the second quarter of 2013 by 0.7 per cent, flash estimates showed on Friday (Oct 1).
HDB resale prices for the July-September period rose 2.7 per cent over the previous three months, slightly lower than the 3 per cent increases recorded in the first and second quarters of this year. Year on year, prices are up by 12.3 per cent.
Defying the Covid-19 economic slowdown, prices have risen strongly this year, in part due to delays in the completion of new HDB flats as the pandemic caused manpower shortages, supply chain disruptions and forced some construction firms out of business.
"The bottlenecks, shortages and challenges in the construction industry, which is contributing to the increase in demand for HDB resale flats and subsequently, the increase in HDB resale prices, is expected to continue in the short term," said ERA Realty's head of research and consultancy Nicholas Mak.
But he also said the 2.7 per cent increase this quarter could mean that HDB resale prices have peaked and will be slowing down.
The 3 per cent quarterly rate of HDB resale increase is unsustainable, as neither the average household income nor the local population is growing at that rate, Mr Mak observed.
Mr Lee Sze Teck, senior director for research at Huttons Asia, noted that HDB resale prices have increased by 8.9 per cent so far this year, 14 per cent since the circuit breaker in the second quarter of last year and 15 per cent since prices hit bottom in the second quarter of 2019.
Ms Christine Sun, senior vice-president of research and analytics at real estate firm OrangeTee & Tie, said the current housing boom is largely fuelled by couples turning from the Build-To-Order (BTO) market to the resale market and upgraders who are buying bigger flats.
"More couples are opting for completed homes in the secondary market amid growing uncertainty about the completion dates of new BTO flats," she said.
"As private home prices have been rising and private home supply is dwindling in the suburban areas, some flat owners have chosen to upgrade to bigger flats which are still relatively more affordable than private housing. They may need more space as their families have expanded or to work more comfortably as work-from-home or hybrid work arrangements may become a norm."
Dr Tan Tee Khoon, PropertyGuru Singapore country manager, added that the number of million-dollar HDB flat transactions continued to rise, driving prices up.
There were 67 such HDB flats sold this quarter, the most expensive of which was a five-room flat in Bishan which changed hands for $1.295 million in July, he said.
HDB also announced on Friday that it will offer about 4,400 BTO flats in Choa Chu Kang, Hougang, Jurong West, Kallang/Whampoa and Tengah next month.
The projects are under review, and more details will be announced when ready.
HDB said it is on track to launch about 17,000 BTO flats this year, which is higher than the 14,600 flats launched in 2019 and the 16,800 flats launched last year.
The BTO flat supply will be supplemented by balance flats which are offered via the Sale of Balance Flats exercises and open booking, HDB added.
In February next year, HDB will offer about 2,000 to 3,000 BTO flats in Geylang, Tengah and Yishun.
The supply is also subject to review and more details will be firmed up closer to the launch date.
More information on the BTO flats is available on the HDB InfoWEB.
"HDB will continue to monitor the housing demand and make adjustments where necessary," it said.
Ms Sun said if construction delays are prolonged, more people may turn to the HDB resale market, and the increased demand may push prices higher in the coming months.
Resale prices may rise between 11 per cent and 12 per cent this year, which is one of the fastest gains since 2010, when prices surged by 14.1 per cent, she said.
Mr Lee said that while he estimates HDB resale transactions in the third quarter to have risen by 19.8 per cent from the previous quarter, the slower price increase indicates price resistance has set in.
Prices may increase by another 2 per cent to 2.5 per cent in the fourth quarter, bringing the price gains for the whole year to more than 11 per cent, he added.
He forecasts resale volume for the whole of this year to total between 28,000 and 29,000 flats.