SINGAPORE - The Housing Board resale market staged a stunning rebound in the third quarter of 2020, with transactions soaring to a 10-year high after diving to their lowest since 2007 in the previous three months.
There were 7,787 resale flats transacted in the July to September quarter, a 127.3 per cent rise from 3,426 units in the second quarter, when sales plunged 40 per cent quarter on quarter because of the two-month circuit breaker, which ended on June 1.
But this was not all pent-up demand: The number is also 24.3 per cent higher than the 6,264 flats sold in the same period last year.
The resale volume at 7,787 flats is also the highest in 10 years, since 8,205 flats were sold in the third quarter of 2010, analysts noted.
Buyers flocked to the HDB resale market as they favoured living space and affordability in the current economic climate, said Huttons Asia director of research Lee Sze Teck.
Orange Tee & Tie head of research and consultancy Christine Sun said some demand could have been drawn from the Build-To-Order (BTO) market.
"Many BTO flats from recent launches were slated to be completed in four to five years' time and the long waiting period drove some buyers to the resale market, especially for couples with urgent accommodation needs," she said.
Ms Sun added that many BTO launches were heavily oversubscribed and unsuccessful candidates had to turn to the resale market as an alternative.
HDB said around 9,300 BTO flats in various estates will be offered next month and in February next year. The next Sale of Balance Flats exercise will also be held next month, barring any unforeseen circumstances.
Prices of resale HDB flats also rose, by a stronger 1.5 per cent quarter on quarter, after edging up 0.3 per cent in the second quarter. This is the fastest rate of growth in the past eight years, since they increased by 2.5 per cent in the fourth quarter of 2012, said ERA Realty's head of research and consultancy Nicholas Mak.
Year on year, prices rose 2.3 per cent. They are up 1.8 per cent for the first nine months of this year.
“This can be seen as a milestone in the journey toward recovery for the HDB resale segment, where prices have been relatively soft since the implementation of the 30 per cent mortgage servicing ratio in 2013,” PropNex said.
It added: “In all likelihood, HDB resale values in 2020 will outperform the 0.1 per cent increase posted in 2019. We are projecting resale prices to rise by 2.5 per cent to 3 per cent in 2020, possibly marking the fastest pace of price increase since the 6.5 per cent growth in 2012.”
Ms Sun said the increase in prices could be attributed to many newer HDB resale flats being sold in the third quarter.
"As newer flats tend to command higher prices than older ones, the overall price index could have been 'uplifted' by the newer flats. Some sellers have also raised their asking price since housing demand has returned," she said.
Mr Lee said the supply of resale flats in the third quarter was lower as some upgraders held back from selling their flats because of the six-months' extension on remission of the additional buyer's stamp duty (ABSD). Hence, there were slightly more buyers than sellers for resale flats in the third quarter, resulting in higher prices, he added.
HDB resale prices may continue to climb in the coming quarters because of lower supply from the longer completion period for BTO flats and ABSD relief. Mr Lee said resale prices may increase up to 2.5 per cent this year, the largest price growth since 2012.
Ms Sun said the property market is still at risk from a confluence of economic challenges - a global economic slowdown, a grim employment outlook and the adverse impact of the withdrawal to come of government support measures for businesses.
Nevertheless, tailwinds from low-interest rates may prop up sales and sustain prices in the near term, she added.
Said Ms Sun: "We are cautiously optimistic that around 20,000 to 23,000 resale flats could be transacted this year. Prices may trend between 1.5 per cent and 3.5 per cent for the whole of 2020."
Mr Mak said at the current pace, the price index could rise between 2.5 per cent and 3.5 per cent for 2020. In addition, about 23,000 to 24,000 HDB resale flats could exchange hands in 2020, about the same volume as the 23,714 flats transacted in 2019.
For the HDB rental market, job losses may have led to the lower rental volume. There were 8,196 approved applications to rent out HDB flats in the third quarter, a 22.2 per cent drop from 10,539 in the previous quarter, and a 31.7 per cent fall from the same period last year.
Ms Sun said rental demand was stronger in the third quarter because employers were actively relocating their workers from dormitories to prevent them from getting infected by the coronavirus and avoid the hassle of observing stringent regulations there.
HDB rents increased on average by 2.7 per cent over the third quarter, Huttons Asia estimated. Woodlands saw the biggest jump in rents due to more Malaysians renting flats in the area for its proximity to Johor.