SINGAPORE - Prices in the Housing Board (HDB) resale market have continued to climb, logging gains for the ninth consecutive quarter even as sales momentum slipped.

Resale prices rose at a quicker pace of 2.8 per cent in the second quarter of this year, compared with 2.4 per cent in the first quarter, showed data released by HDB on Friday (July 22).

This is likely due to HDB resale flat prices being at a record high, said PropertyGuru Singapore country manager Tan Tee Khoon.

Delays in construction of Build-To-Order (BTO) flats and the buying preference for larger HDB flat types could be driving the growth in prices, he added.

"Until BTO construction delays are fully alleviated and completion times shortened, young families continue to be pushed towards the HDB resale market," Dr Tan said.

However, Huttons Asia senior director of research Lee Sze Teck noted that more buyers are resisting paying higher prices.

"It has been observed that there is an increasing number of resale flats whose transacted price matches the valuation price, leading to zero cash over valuation (COV)," he said.

COV is the amount a buyer has to pay in cash when a resale flat is sold above its actual HDB valuation. If the valuation is lower than the sale price, the COV must be paid in cash, not from grants, CPF savings or home loans from HDB or the bank.

A total of 6,819 HDB resale flats changed hands in the second quarter of the year, down 1.7 per cent from 6,934 in the previous quarter - marking the third consecutive quarter of declining transactions.

Compared with the second quarter of last year when 7,063 HDB resale flats were sold, transactions were 3.5 per cent lower.

Mr Lee said the dip points to signs of the market losing momentum, and noted that it is the lowest quarterly sales since the circuit breaker in the second quarter of 2020.

One Global Group senior analyst Mohan Sandrasegeran said this could be attributed to the overwhelming response for BTO and Sale of Balance flats launched in May, as well as the June school holiday seasonal lull.

The second quarter saw 83 HDB resale flats change hands for at least $1 million, on par with the 83 in the first quarter.

Mr Sandrasegeran said the 166 million-dollar deals in the first half of the year is a strong indication that demand for such flats is still unwavering, despite inflationary pressures and rising interest rates.

He added: "Buyers of such flats are generally undeterred by exorbitant prices and have ample liquidity, as they place heavy emphasis on locational attributes and having a spacious home."

According to HDB data, four-room flats in the central area were the most expensive in the second quarter, with a median price of $964,000, up from $811,000 in the first quarter.

This was followed by the mature town of Clementi, where the median price of a five-room flat was $900,000, and Queenstown, where it was $875,000 - dropping from its peak of $952,000 in the previous quarter.

HDB data did not provide the second-quarter median resale price of five-room flats in the central area, which covers The Pinnacle@Duxton.

It has stepped up its flat supply and is on track to launch up to 23,000 BTO units each year in 2022 and 2023, across mature and non-mature towns, to cater to the strong demand.

Next month, it will roll out about 4,900 BTO flats in towns such as Ang Mo Kio, Bukit Merah, Choa Chu Kang, Jurong East, Tampines and Woodlands.

In November, about 9,500 BTO flats in towns such as Bukit Batok, Kallang Whampoa, Queenstown and Yishun will be on offer.

Mr Lee said resale prices should trend more towards stability for the second half of the year, as rising interest rates and more affordable BTO flats with a shorter construction period will divert some demand away from the resale market.

But Mr Sandrasegeran said buyers with immediate housing needs will continue to be the primary drivers of the HDB resale market.

Dr Tan added: "Another factor that will prop up prices is the bumper crop of about 31,000 flats which will fulfil their MOP (minimum occupation period) this year and enter the resale market."

Sellers will be able to demand a premium because of the longer remaining lease.

Mr Lee expects prices to rise by up to 10 per cent.

In the HDB rental market, fewer flats were leased in the second quarter of this year, down by 0.6 per cent to 56,015 units, compared with 56,340 in the previous quarter.

The number of approved applications to rent out HDB flats also fell by 8.6 per cent to 9,309 cases in the second quarter of this year, from 10,189 in the previous quarter.