SINGAPORE – Prices of Housing Board flats are showing signs of cooling, with resale prices rising at 1 per cent in the first three months of 2023, marking the smallest quarterly increase in the past 10 quarters, or 2½ years.

The increase in the first quarter was less than half of the 2.3 per cent for September to December 2022, data from HDB showed.

Resale volume rose by 5.8 per cent to 6,979 transactions in the first quarter, from 6,597 transactions in the previous three months. Compared with the same period a year ago, resale transactions were 0.6 per cent higher.

Analysts said higher housing inventory and the cooling measure introduced in September 2022 would have contributed to the slowdown in price growth.

“The housing shortage is easing as inventory builds up, with more flats being completed in recent months,” said Ms Christine Sun, OrangeTee & Tie’s senior vice-president of research and analytics. “The Government continues to launch BTO (Build-To-Order) projects and released new flats for sale.”

Ms Sun also noted that more four-room and smaller-sized flats, totalling 5,000 units, were sold between January and March 2023, compared with 4,622 units in the last three months of 2022. The sale of five-room flats went up by 1.3 per cent, from 1,545 to 1,565 units.

Executive flats, conversely, saw volumes fall by 3.7 per cent from 430 to 414 units.

Since Sept 30, 2022, private home owners must wait 15 months after the sale of their home before they can buy a resale flat without housing grants.

The temporary cooling measure, aimed at moderating demand from private home owners who tend to have a bigger budget for HDB flats, was introduced after the market showed growing signs of overheating.

Property portal Mogul.sg chief research officer Nicholas Mak believes that the 15-month wait would have contributed to the slowdown in the HDB price growth that started in the last quarter of 2020.

Based on the HDB data, PropertyGuru Singapore country manager Tan Tee Khoon noted that estates such as Woodlands, Punggol and Yishun, which saw the most BTO flats fulfilling their five-year minimum occupation period in 2023, were driving the resale market.

In terms of resale prices, Bishan reported the highest median price of $900,000 for five-room flats, while the highest median price for four-room flats was in Queenstown at $864,000. For three-room flats, Punggol and the central area recorded the highest median price at $450,000.

“Buyers are still willing to pay for space and seek out larger flat types, as evidenced by the sustained demand for million-dollar flats despite the dwindling supply of five-room or larger flats,” said Dr Tan. He noted that there were 94 units of million-dollar resale flats sold in the first quarter, down from 96 units in the previous quarter.

Meanwhile, the number of approved applications for HDB rentals rose 13.9 per cent to 9,657 cases, from 8,476 cases in the previous quarter. The latest number was 5.2 per cent lower than that of the same period in 2022. As at the end of March 2023, there were 56,652 HDB flats rented out.

Ms Sun said: “Rental demand increased as tenants returned to the market after the year-end holidays, and leasing activities increased after the Chinese New Year period. Some tenants shifted downstream from renting private properties to HDB flats as rent prices have surged significantly islandwide, and many are looking for cheaper accommodation.”

In the Government’s latest round of property cooling measures announced on Wednesday, the additional buyer’s stamp duty (ABSD) was raised for citizens and permanent residents buying their second and subsequent properties. Foreigners would also have to pay a higher ABSD for purchasing any residential property in Singapore.

While this is set to slow down private residential sales in the coming months, Mr Mak said the curbs could also slow down the sales of HDB resale flats “as buyers and sellers take stock of the new market environment that is shaped by the latest round of property curbs”.

In May, HDB will offer about 5,400 BTO flats in towns such as Bedok, Kallang/Whampoa, Serangoon and Tengah.

In August, between 5,200 and 6,200 BTO flats in towns such as Bukit Merah, Choa Chu Kang, Kallang/Whampoa, Queenstown and Tengah will be offered.