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Price resistance setting in, say analysts, as HDB Q1 resale prices see smallest increase in last 10 quarters

Price resistance setting in, say analysts, as HDB Q1 resale prices see smallest increase in last 10 quarters

HDB flats in Singapore. (File photo: TODAY/Ooi Boon Keong)

SINGAPORE: The HDB resale market is seeing signs of price resistance setting in, said analysts on Monday (Apr 3), as flash estimates showed that resale prices grew at a slower pace in the first quarter of 2023.

The 0.9 per cent increase is the smallest rise in the last 10 quarters.

The Housing and Development Board released data on Monday that showed the Resale Price Index (RPI) rising 0.9 per cent to 173.4, slower than the 2.3 per cent increase in the fourth quarter of 2022.

The RPI provides information on the general price movements in the resale public housing market.

This is the 12th consecutive quarter of increase for the RPI.

The resale volume for this year up to Mar 30 is 6,880, which is 1 per cent higher than the same period last year, when there were 6,810 cases.


The moderate 0.9 per cent growth shows that price resistance is setting in, said Huttons Asia's senior director for research Lee Sze Teck. 

With more than 10,000 Build-to-Order (BTO) flats expected to be launched in the coming months, potential resale flat buyers may be pulled away, said Mr Lee. 

"Some of these flats may have shorter waiting time and may attract some buyers away from the resale market. The higher interest rate in 2023 may also deter buyers from the resale market and see them applying for a BTO flat."

ERA's key executive officer Eugene Lim also pointed to price resistance as a possible reason for the slowdown in resale price increases.

"You can see increasingly more buyers exercising restraint when they were asked to increase their bid after their initial offer to purchase the flat was turned down by the seller," he pointed out. 

"This is because a higher purchase price could well mean paying higher cash-over-valuation. Also, with the Loan-to-Value limit for a loan from HDB lowered to 80 per cent, buyers with insufficient CPF funds for the 20 per cent would have to foot out more cash."

Ms Christine Sun, senior vice president of research & analytics at OrangeTee & Tie, said price increases may have slowed as smaller flats made up a higher proportion of sales last quarter, climbing from 69.7 per cent to 71.5 per cent in 2023. Small flats usually fetch lower prices. 

"As housing affordability takes centre stage, small resale flats will continue to find favour with buyers," said Ms Sun. "Rising interest rates, inflationary pressures and high resale prices have crimped buyers’ purchasing power."

Prices will continue to moderate over the year, the analysts predicted. Ms Sun said resale prices will continue to go up but at a slower pace of 5 per cent to 8 per cent, compared to 10.4 per cent in 2022 and 12.7 per cent in 2021.

Echoing that was Mr Lim of ERA, who gave that range of price increases for the rest of the year to be between 5 per cent and 7 per cent.

Source: CNA/hm(ac)


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