HDB resale prices up 2.1%; private home market 'stable' in second quarter: Flash estimates

SINGAPORE: Prices of Housing Board (HDB) resale flats rose by 2.1 per cent in the second quarter of 2024, higher than the 1.8 per cent growth in the previous quarter. 

Flash estimates released by HDB on Monday (Jul 1) showed that the Q2 resale volume up to Jun 27 was 7,208 - 14.5 per cent higher than 6,297 transactions in the same period last year.

HDB attributed the increase in resale prices and volume to strong broad-based demand and some "supply tightness in the market" since fewer flats met the minimum occupation period (MOP) this year compared to 2023. 

Domestic mortgage rates are expected to remain elevated relative to the low level seen over the past decade, the Housing Board added.

"While overall economic conditions are sound, the global economic outlook is subject to uncertainties, particularly stemming from ongoing geopolitical instabilities that could precipitate global supply and demand shocks," it said.

Property analysts attributed the strong demand for resale flats to various factors, including fewer Build-to-Order (BTO) sales launches a year and increased housing grants. 

Ms Christine Sun, chief researcher and strategist at OrangeTee and Tie, said that the market outlook for the public housing sector is "undeniably positive" as Singapore’s economic growth and improved hiring landscape have bolstered consumer confidence.

She noted that the surge in demand for resale flats in Q2 followed a decrease in the frequency of BTO sales launches from four to three times a year and the Sales of Balance Flat (SBF) exercise being limited to once a year. 

Unsuccessful applicants for the sole SBF exercise in February turned to the resale market in the second quarter, said Lee Sze Teck, senior director of data analytics at Huttons.

Ms Sun also highlighted how more private property homeowners were returning to the resale market after completing the mandatory 15-month wait-out period for those who want to downgrade to a resale flat.

"This may have contributed to an increase in demand for flats, especially larger units," she said.

Increased housing grants for eligible homebuyers also rendered resale flats more accessible and affordable for many homebuyers, particularly young couples, said Ms Sun.

PRIVATE HOME MARKET REMAINS "STABLE"

Private home prices were up by 1.1 per cent in Q2, moderating from the 1.4 per cent rise in the previous quarter, according to flash estimates provided by the Urban Redevelopment Board (URA) on Monday.

Sale transaction volume up to mid-June was "broadly unchanged from the previous quarter", said the URA. There were 4,215 transactions in Q2, compared to the 4,230 in the first quarter of this year.

Slower price growth in the private housing sector in the second quarter could be attributed to limited housing options and consumers exercising greater caution, said property analysts. 

Mr Lee pointed out that the number of private residential units launched in Q2 was 50 per cent lower than in the previous quarter. This was due to the launch of smaller non-landed projects in Q2, he said. 

Due to smaller project launches, developers’ sales in the second quarter were estimated to be about 35 per cent lower than those in Q1, Mr Lee said. 

The smaller supply in Q2, “has resulted in a significant decline in new home sales, which in turn has put downward pressure on the overall price index since new homes typically command higher prices in the market,” said Ms Sun. 

“Therefore, the decline in new home sales last quarter had a pronounced effect on property price growth.”

Buyers were also more cautious in view of the muted economic and employment conditions, said Mr Lee. 

However, he also highlighted that overall developers’ sales volume was on par with the number of launched units, reflecting robust demand for new homes.

Eugene Lim, key executive officer at ERA Singapore, said that new home prices continue to hold even as land prices moderate amid higher-for-longer interest rates as well as higher construction and labour costs. 

“Buyers may increasingly see better value in resale units especially if location, size and amenities are critical purchase factors,” he added.

OUTLOOK

Property analysts expect the HDB resale market to remain robust in the latter half of 2024. 

The lack of a BTO exercise in the third quarter could result in more buyer activity in the HDB resale market, said Mr Lim. 

This sentiment was echoed by Mohan Sandrasegeran, head of research and data analytics at Singapore Realtors Inc (SRI), who also pointed out that no SBF exercise would be conducted in November. 

“This extended gap between BTO and SBF exercises is likely to influence some prospective homeowners, especially those in urgent need of housing, to explore alternatives such as the resale market,” he said.

“The delay in available options may prompt these potential home seekers to seek more immediate solutions.”

While consumer confidence and buying sentiment are expected to remain positive due to improvements in Singapore’s economy and hiring prospects in the second half of 2024, the interest rate environment remains uncertain in the near term, said Ms Sun. 

“Competition for buyers may stiffen as the government plans to release more flats in good locations in October,” she added.

HDB will offer about 8,500 flats in 15 BTO projects in the October exercise. The new BTO projects will be offered as Standard, Plus or Prime flats based on their specific locational attributes.

Some buyers may be attracted to the exceptional locations offered during the upcoming exercise, particularly the new flats in Bayshore, Geylang, Woodlands, and Pasir Ris, which are in proximity to an MRT station, said Ms Sun.

“Nevertheless, certain resale flats in the vicinity may still benefit from the upcoming BTO sales launch due to the heightened awareness of the area and potential increase in amenities when these new flats are completed,” she said. 

"Moreover, buyers purchasing resale flats in the same locations continue to enjoy a shorter 5-year MOP," she added.

Property analysts said that demand for private homes is expected to pick up in the second half of 2024, due to several prominent projects in the pipeline.

These include the launch of condominiums such as SORA, The Chuan Park and Union Square Residences.

“These projects are poised to inject fresh momentum into the new launch market by offering diverse living options that cater to a broad spectrum of preferences and needs,” said Mr Sandrasegeran.

With a gradually strengthening global economy and the hiring outlook expected to improve in the latter half of the year, sales volume could increase for the rest of 2024, said Ms Sun.

Editor's note: The number of projects in the next BTO exercise has been amended after HDB corrected the information that it initially provided.