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Resale HDB volume drops 7% in 1Q2020, worse performance expected for next quarter

Timothy Tay
·4-min read

SINGAPORE (EDGEPROP) - The number of HDB resale transactions for 1Q2020 fell by 7.0% to 5,893, from 6,339 in 4Q2019, according to the housing statistics released by HDB on April 24. On a yearly basis, the resale transaction volume in 1Q2020 was 21.9% higher.

According to Lee Sze Teck, director of research at Huttons Asia, the bump in y-o-y resale transactions could have been due to private residential projects which obtained their Temporary Occupation Permits in 4Q2019 and 1Q2020, resulting in more HDB upgraders needing to dispose of their flat.

“HDB upgraders could be more willing to lower their asking price as the time pressure to meet the ABSD [additional buyer’s stamp duty] timeline increases,” says Lee.


Table: HDB

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He suggests that HDB should consider extending the six-month period for HDB owners upgrading to an executive condo, while the six-month period to claim back ABSD should be reviewed as well, in view of the “circuit breaker” measures to tackle the Covid-19 outbreak.

Meanwhile, the resale price index for the first three months of the year remained unchanged on a quarterly basis.

“Prices of HDB resale flats have been rather stable as major price fluctuations have been few and far between in recent years. Over the past 20 quarters, the q-o-q price changes had been within a narrow band of between -1% and 1%,” says Christine Sun, head of research and consultancy at OrangeTee and Tie.

In addition, the number of approved applications to rent out HDB flats fell by 4.0%, from 12,079 cases in 4Q2019 to 11,591 cases in 1Q2020. On a yearly basis, the number of applications in 1Q2020 fell by 1.6% compared to 1Q2019.


Meanwhile, the resale price index for the first three months of the year remained unchanged on a quarterly basis. (Picture: Samuel Isaac Chua/The Edge Singapore)

Overall, there were 57,652 HDB flats rented out at the end of last quarter, an increase of 0.7% over the 57,224 units in 4Q2019.

Nicholas Mak, head of research & consultancy at ERA Realty, says: “The HDB leasing market is starting to weaken due to the Covid-19 outbreak. Despite the lockdown of the Singapore-Johor border by the Malaysian government on March 18, leaving many Malaysians who were working or studying in Singapore rushing to find accommodation, rental transactions did not increase in 1Q2020.”

Looking ahead, Mak says that the HDB resale volume in 2Q2020 could drop to less than half of the volume in 1Q2020. “We can almost write off the second quarter due to the eight-week circuit breaker period,” he says, adding that “it could bounce back once the circuit breaker is lifted”.

His sentiments were echoed by Sun, who says: “Property sales may 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.”


Chart: HDB

Sun estimates that the number of resale transactions for the full year could be between 21,000 and 22,000 units, but Mak suggests that the number may eventually clock in at 17,000 to 20,000 transactions, with the resale price index falling by 0.8% to 2.0% for the whole of 2020.

According to Sun, the price affordability of most HDB flats remains attractive to some buyers, especially those looking for cheaper housing options, or a smaller housing loan considering the current economic uncertainty.

“Overall prices of resale flats may enter the negative territory should the health crisis persist and unemployment creep up. Property values may hold steady for areas of higher demand such as those located near MRT stations, amenities or the city centre,” says Sun.

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