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HDB flash estimates show 2.4% q-o-q price growth in 3Q2022; cooling measures to cool market

Henderson Vue, one of the million dollar HDB unit transacted recently (Photo: Samuel Isaac Chua/EdgeProp Singapore)

SINGAPORE (EDGEPROP) - HDB resale prices rose for a 10th consecutive quarter in 3Q2022, up 2.4% q-o-q, according to HDB flash estimates. The pace of increase was smaller compared to the 2.8% q-o-q increase in 2Q2022, says Christine Sun, OrangeTee & Tie senior vice president of research & analytics.

Read also: HDB resale prices climb a fifth straight quarter by 2.8% in 2Q2021

Prices were 11.4% higher compared to 12 months ago, notes Sun. Year-to-date, overall prices rose by 7.8% in the first nine months of this year.

Based on transaction data, 7,270 HDB resale flats changed hands in 3Q2022, up 6.6% q-o-q from 6,819 flats in the previous quarter.

“Despite the uncertain global outlook, with rate hikes raising the spectre of a potential recession in advanced economies, sentiment in the HDB resale market remained lively in 3Q2022,” says Wong Siew Ying, PropNex head of research and content.

In 3Q2022, a total of 111 HDB resale flats were transacted for at least $1 million – a record for such sales in a quarter. The new 15-month wait-out period introduced as part of the latest cooling measures will moderate demand for larger flats, especially those in prime locations, notes Wong. Meanwhile, the tighter loan-to-value (LTV) limit of 80% and a 3% medium-term interest rate floor will restrict the loan quantum for those taking a housing loan from the HDB.

HDB Resale Price Index

Source: PropNex Research, HDB

According to OrangeTee & Tie’s Sun, the slower price growth of 2.4% q-o-q in 3Q2022 indicates that the housing sector has already started to feel the effects of rising interest rates and inflation. “Price resistance may have set in as the cash-over-valuation (COV) seems to have declined in recent months,” she points out.

Median prices at nine out of 26 towns slipped in the previous quarter, notes Sun. The Central area saw the greatest price decline of 14.5% q-o-q in 2Q2022, followed by Bukit Timah (12.6% decline), Ang Mo Kio (7.8%) and Clementi (7.5%). Prices of resale flats in the other 17 towns rose between 0.6% and 18.1% last quarter. The highest quarterly increases were in Toa Payoh (17.6%), Bishan (14.9%), Tampines (6.1%) and Bedok (5.6%). The rest of the towns saw average price increase of 2.3% last quarter.


‘Most significant round of cooling measures’ in public housing

“The latest cooling measures are probably one of the most significant rounds of cooling measures imposed on the public housing market,” says Sun. “We can expect a stronger market reaction when compared to previous measures.”

New measures like the tightening of borrowing limits for both HDB loans and private loans, as well as a more stringent total debt servicing ratio and the mortgage servicing ratio, will affect almost all flat buyers, including Build-To-Order flat purchases, notes Sun.

However, the 15-month wait-out period for private homeowners purchasing HDB flats will impact the upper tier of the market adversely, points out Sun. “Since some private homeowners will face bigger hurdles in purchasing resale flats, there is likely be a temporary pull-back in demand for large flats which may result in a price correction in the coming months,” she says.

The first nine months of 2022 saw 250 flats (five-room and larger) transacted, compared to 210 for the whole of 2021, says Lee Sze Teck, senior director of research for Huttons Asia. “Buyers are chasing after space and the HDB resale market has such options at attractive prices,” he adds.

Million-dollar flat transactions in the first nine months of 2022 (up to Sept 29) totalled 836 units. Of these, 113 units or 13.5% were three- and four-room flats, according to OrangeTee & Tie Research. “Therefore, we may expect the proportion of smaller million-dollar transactions to rise in future,” says Sun.

Even while the number of million-dollar flat transactions is expected to fall, the proportion of smaller flats – three- and four-room types - in this price category will increase, Sun predicts. “This is because those aged 55 years and above can still purchase smaller flats (four-room or smaller) without observing the 15-month waiting period,” she explains. And this, in turn, could push up prices of such flats.

HDB resale prices to moderate in 4Q2022

HDB resale prices are likely to moderate in 4Q2022 in the wake of the cooling measures, says Huttons’ Lee. Private property owners (PPOs) now need to wait 15 months after the sale of their private property before they can purchase an HDB resale flat. “This effectively cuts off the demand from PPOs and ex-PPOs,” he says. “But this is a temporary measure. It may be reinstated back to the old policy once prices stabilise and the attention-grabbing million-dollar flats situation has cooled.” (Find HDB flats for rent or sale with our Singapore HDB directory)

In the short term, PropNex’s Wong anticipates that there will be “a period of impasse”, where would-be buyers are waiting for prices to fall while sellers look to hold on to their asking price. “This may play out and cause resale volume to moderate slightly perhaps in the next two to three months, before the market adjusts and finds an equilibrium,” she adds.

However, there should be little impact on HDB resale volume, according to Lee. As of Oct 2, transaction volume of HDB resale flats is estimated at 21,023 units. He expects HDB resale volume in 4Q2022 to be in the range of 6,000 and 6,500. This translates to a full-year transaction volume of around 27,000.

“The largest-ever BTO launch in November may draw some demand away from the resale market,” Lee says. “Prices are likely to moderate further to 1.0% to 2.0% in 4Q2022, giving rise to a full-year price gain of not more than 10%.”

PropNex is forecasting overall HDB resale prices to rise by 9% to 10% for the full year of 2022, slowing from 12.7% growth in 2021. Wong expects transaction volume for the year to ring in at 27,000 to 28,000 units.

Check out the latest listings near Bukit Timah, Ang Mo Kio, Clementi, Toa Payoh, Bishan, Tampines, Bedok

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