HDB resale prices will not “correct excessively”

OrangeTee & Tie expects property sales to “pick up speed and regain some momentum when the crisis subsides and safe distancing measures are gradually eased”.

While housing demand may ease should the Covid-19 pandemic persist, OrangeTee & Tie does not expect resale prices of Housing and Development Board (HDB) flats to correct excessively in the coming months.

This comes as HDB resale prices are not usually subject to volatile swings since most people acquire flats for their own occupation and not for speculation, it said in a report.

In fact, the HDB Resale Price Index held flat in the first quarter of 2020 compared to the previous quarter.

HDB data for Q1 2020 also showed that total resale volume fell 7% quarter-on-quarter to 5,893 units. On an annual basis, resale volume increased by 21.9%.

Based on caveat records from data.gov.sg, there were 5,531 caveats in Q1 2020, or the highest first-quarter resale volume registered in eight years.

Related: The URA Caveat: Why It’s So Irresistibly Good

“Demand had remained buoyed prior to the onset of the pandemic, indicating that the policy changes were effective in boosting the housing market last year,” said the report.

The government introduced various policy changes last year aimed at improving housing affordability for buyers as well as demand of flats. These include enhanced CPF Housing Grant, increased income ceiling and larger home loans for eligible buyers.

Read: Buying an HDB? Here’s What Changed in The CPF Usage and HDB Loan Update

HDB data revealed that fewer small flats were transacted during the period under review. In Q1 2020, resale applications for one-, two- and three-bedroom flats fell 10.2% to 1,531.

The number of resale transactions for bigger flats, such as four-, five-bedroom and executive units dropped 5.9%, with 4,362 resale applications received in Q1 2020.

Citing information from data.gov.sg, the report noted that the average price of both standard and non-standard flats within mature estates slipped 0.1% and 0.6% quarter-on-quarter in Q1 2020. On an annual basis, prices dipped 1% and 3.3% for standard and non-standard flats, respectively.

Over in non-mature estates, prices of both flat types increased 0.5% quarter-on-quarter and 2.6% year-on-year, possibly due to their longer balance lease. Standard flats in non-mature estates also climbed 0.8% quarter-on-quarter and 2.5% year-on-year.

Looking ahead, Christine Sun, Head of Research and Consultancy at OrangeTee & Tie, expects property sales to “pick up speed and regain some momentum when the crisis subsides and safe distancing measures are gradually eased”.

“Genuine buyers and those with urgent housing needs may return to the market when flat viewings resume,” she said.

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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg