HDB resale flat prices have grown 8.9% since the start of 2021, with the projected year-on-year increase set at an estimated 10% to 12%.
Property analysts expect Housing and Development Board (HDB) resale prices to continue to increase in the next few quarters, albeit at a slower pace, reported Channel News Asia (CNA).
Flash estimates from the HDB showed that HDB resale prices reached an all-time high after increasing 2.7% in the third quarter of 2021.
Prices have expanded by 8.9% since the start of 2021, amid the drawn-out delays in the construction of Build-to-Order (BTO) projects, which forced homebuyers to turn to the HDB resale market.
While prices are set to increase, experts believe the pace of growth will lose some steam.
PropertyGuru Singapore Country Manager Dr Tan Tee Khoon said there are already signs for this, pointing that the 2.7% hike forecasted for Q3 2021 is lower compared to the increase posted in the preceding quarters.
“From Q4 2020 to Q2 2021, the HDB Resale Price Index has consistently grown by at least 3.0% each quarter,” he said.
ERA Realty Research Head Nicholas Mak said this could indicate that price growth has peaked.
“The 3% quarterly rate of housing price increase is unsustainable as neither the average household income nor the local population is growing at that rate,” said Mak as quoted by CNA.
In fact, analysts expect authorities to closely monitor the market since the current pace of price growth is unsustainable in the long run.
Still, for the fourth quarter of 2021, analysts expect a similar price hike as the previous ones, taking growth for the entire 2021 between 10% and 12%.
Christine Sun, OrangeTee & Tie’s Senior Vice-President of Research and Analytics, said this would mark one of the fastest increases since 2010 when prices jumped 14.1%.
PropNex CEO Ismail Gafoor believes the momentum will continue into next year, adding prices will likely grow by 8% to 10% for the whole of 2022, which is in stark contrast to the negative growth posted from 2013 to 2018.
“The reason for the demand is the delayed construction. And as long as (that continues), demand is strong, buyers have to pay a premium and that translates to an increase in prices,” he said as quoted by CNA.
Dr Lee Nai Jia from the Institute of Real Estate and Urban Studies (IREUS) at the National University of Singapore described the market as sticky, noting that the latest price hike may set off even higher offers from buyers.
“Because in the past, the perception is that probably these (increases) will go off, so buyers will resist the increase in prices from sellers,” said Dr Lee as quoted by CNA.
“But seeing the prices continue to increase, buyers may be triggered to act and pay a much higher price.”
“(Authorities) definitely will not accept double-digit growth over a sustained period of more than two to three years. It’s not to the greater good of citizens,” said Ismail.
“Because if property prices go up 10% for a continuous period of five years … immediately, the issue of affordability will come in because our salaries don’t go up the same in five years.”
Cheryl Chiew, Digital Content Specialist at PropertyGuru, edited this story. To contact her about this story, email: firstname.lastname@example.org.