HDB resale numbers highest since 2012, while sales of private homes dive
Property experts pointed out that the disparity in price trends for HDB resale flats and private homes last year was an anomaly as prices for both tend to rise and fall in tandem.
SINGAPORE — Transactions of resale Housing and Development Board (HDB) flats rose to 23,099 last year — the highest in the last six years and a 4.6 per cent jump from the previous year’s figure of 22,077.
In contrast, private home developers sold almost 20 per cent fewer units, according to the latest official statistics from the Urban Redevelopment Authority (URA). Only 8,795 units were sold last year, compared with 10,566 units in 2017.
The price gap between HDB resale flats and private homes continued to widen last year, this time by 8.8 percentage points, which was more than three times the rate in 2017.
Confirming flash estimates issued earlier this month, the URA’s statistics showed that private home prices here soared 7.9 per cent last year as compared with an 1.1 per cent increase in 2017.
However, resale prices of HDB flats continued to dip, falling by 0.9 per cent last year, which was slightly lower than the 1.5 per cent decrease from 2017.
WHY THIS HAPPENED
Property experts pointed out that the disparity in price trends for HDB resale flats and private homes last year was an anomaly as prices for both tend to rise and fall in tandem.
They attributed this to collective sales fever heating up in late 2016 after the Government reduced supply in its biannual sales programme and land-hungry developers turned to en bloc projects to meet land demand.
Ms Christine Sun, head of research and consultancy at real estate firm OrangeTee & Tie, said that while en bloc fever typically triggers an upturn in the property market as a whole, the HDB market was not impacted “very much” last year largely due to increased awareness of the depreciating value of ageing HDB flats.
In March 2017, National Development Minister Lawrence Wong cautioned home buyers not to assume that all old HDB flats would automatically be eligible for the Selective En bloc Redevelopment Scheme (Sers).
“From what we hear from agents on the ground, in the past, when people buy older flats in a mature estate, the balance lease was not a top-of-the-mind concern,” said Ms Sun.
“But now, it seems like in almost every other deal, that would be the key question asked.”
Owners of old flats concerned about depreciation also tried to sell their apartments, leading to an increase in the supply of resale flats.
PRIVATE HOME MARKET STILL ‘VERY FRAGILE’
However, property cooling measures implemented by the Government last July put the brakes on en bloc activity, and the trend looks to be abating as the price gap went from 0.6 percentage points in the third quarter of last year to 0.1 in the next period.
Private home prices fell 0.1 per cent between October and December last year in contrast to a 0.5 per cent increase for the previous quarter.
Prices of HDB resale flats went down a moderate 0.2 per cent in the fourth quarter, similar to the 0.1 per cent decrease in the preceding period.
Ms Christine Li, senior director and head of research at real estate services firm Cushman & Wakefield, said the “short-lived” revival of the private residential market — which only sustained for five consecutive quarters — showed that the market “was still very fragile”.
The buying demand was largely driven by investment rather than owner occupation, she said.
WHAT’S NEXT
Buyers are expected to remain conservative about buying older HDB flats, but since the en bloc fever has eased, property analysts said the pace of growth in prices of both public and private homes should be moderate.
There is also a silver lining for owners of older flats, as the widening price gap between newer and older flats may turn the tide in their favour. Buyers may be drawn to the price affordability and upgrading potential of older flats as the Government announced plans for the Voluntary Early Redevelopment Scheme (Vers) and the expanded Home Improvement Programme (HIP) in August last year.
WHAT THE CRYSTAL BALL SAYS
“Going forward, we may see (HDB resale) prices move up from their now very stable base... We would probably see a very conservative uptick by about 1 per cent for the whole year,” said Mr Eugene Lim, key executive officer of ERA Realty Network.
“If the global economy does not deteriorate drastically and the job market remains healthy, overall (private residential) prices are likely to remain flat or rise marginally this year. We estimate (a rise of) between 1 and 3 per cent for the whole of this year,” said Ms Sun.
“In 2019, prices are still expected to increase by up to 3 per cent, barring external shocks. The latest cooling measures may have taken steam off the market, but market conditions will still remain relatively favourable compared to the period between 2014 and 2016,” said Ms Li.
