Demand for HDB resale flats is stronger due to interest from displaced en bloc owners and positive sentiment in the private residential market.
Prices of HDB resale flats edged up 0.1 percent in Q2 2018 on a quarterly basis, according to flash estimates released by the Housing Board on Monday (2 July).
“This is an improvement from the 0.8 percent decrease seen in the preceding quarter,” said ERA Realty’s key executive officer Eugene Lim.
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The HDB resale price index also reversed the prior six straight quarterly drops, noted Christine Sun, research head at OrangeTee & Tie.
“Prices continued to trend sideways, indicating that prices are stabilising and may rise slightly in the second half of this year, owing to the increased buying interest from displaced en bloc owners and spill-over positive buying sentiment from the private residential market,” she said.
“Further, as HDB is going to reduce the supply of Build-To-Order (BTO) flats, the resale market could see more demand from younger couples in the coming months.”
The Housing Board announced on Monday that it will reduce the BTO supply slightly from 17,000 to about 16,000 units this year. For August, it plans to release another 4,300 BTO flats in Punggol and Yishun.
According to ERA’s Lim, the issue on the declining leases of older resale HDB flats has been in the spotlight recently, and this may have softened demand and brought down prices.
However, newer HDB resale flats with exceptional attributes continue to command a premium, with some fetching over $1 million like a Queenstown HDB flat that was sold in June.
“For the same location, a comparable private property could cost about double the price, which could be the reason why some buyers are willing to fork out good money for these HDB flats,” Lim explained.
In addition, the government has introduced several measures in the past year to make HDB resale flats more attractive. For instance, eligible home buyers can get a maximum $120,000 in grants – up to $30,000 in Proximity Housing Grants, as much as $40,000 in Additional Housing Grants and up to $50,000 in Family Grants.
“Resale flats also remain the only way for buyers to pick a flat in their desired location, unlike BTO flats, where the location is dependent on HDB’s sale launches and there is an element of chance involved in the buying process.
“There is also no income ceiling for buying resale flats if no grants are taken and if the buyer does not take a HDB loan,” noted Lim, adding that the new resale portal has halved transaction processing time for such units.
As such, resale flats are expected to remain in demand, particularly for those who are not eligible for new HDB flats or have urgent housing needs, said Lim. However, buyers are still price conscious, and through the new resale website they want to ensure they are getting the fair market value.
“For 2018, we are expecting resale HDB prices to stabilise. Any price increase or decrease is likely to be very moderate and would not exceed 1.5 percent for 2018,” projected Lim.
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Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
