The latest round of property curbs is expected to make buyers turn to the HDB resale market, where properties are cheaper.
Prices of resale Housing Board flats climbed 0.1 percent in the second quarter of 2018 – its first increase after nine quarters of decline – hinting that HDB resale prices may be bottoming out.
HDB resale transactions rose 33.3 percent from 4,458 cases in Q1 2018 to 5,941 in Q2 2018, showed HDB data.
More: HDB resale prices up 0.1%, govt to offer BTO flats in Punggol and Yishun
OrangeTee & Tie head of research and consultancy Christine Sun believes the strong demand for resale homes may be “supply-driven as more units had been completed in recent years and being put up for resale after they reached the five year MOP (minimum occupation period)”.
She revealed that the number of HDB flat completions soared 124 percent to 15,456 units in 2011 to 2013 from 6,902 units in 2008 to 2010. In fact, she expects the resale volume “to rise in the coming years as an avalanche of 25,323 HDB flats were completed from 2014-2017 and will reach MOP from next year”.
With the government’s latest round of property cooling measures, ERA Realty’s key executive officer Eugene Lim expects homeowners with tighter budgets as well as en bloc owners to turn to the HDB resale market, where properties are cheaper.
“Resale flats remain the only way for buyers to pick a flat in a location of choice, and unlike BTO flats, the eligibility conditions are far less stringent; especially if the buyer is not applying for CPF Housing Grants; or not taking a home loan through the HDB,” he noted.
“However, as buyers who wish to take loans will have to choose between bank loans, will be affected by the lower LTV, or HDB loans, which have higher interest rates, transaction volume of resale flats is expected to be affected as well.”
Lim predicts total resale transactions for this year to range between 20,000 to 22,000 units, slightly lower than the 22,077 units transacted in 2017.
Meanwhile, the number of approved applications to rent out HDB flats increased 2.6 percent to 12,024 in Q2 2018 from 11,721 during the previous quarter.
Lim revealed that 23,745 units were rented out in H1 2018, up 13.6 percent from the 20,910 units rented out in H1 2017.
“For the more budget conscious tenant, HDB flats remain the accommodation of choice due to their combination of location and budget,” he said.
Meanwhile, HDB said it will offer 4,300 Build-to-Order (BTO) flats in Punggol and Yishun in August. Aside from the new flats, a Re-Offer of Balance Flats exercise will also be held.
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Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email email@example.com