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HDB, private home prices rise in Q3, defying recessionary pressures

SINGAPORE — Property prices have continued to beat expectations despite the economic downturn. Prices of Housing and Development Board (HDB) resale flats rose 2.1 per cent in the third quarter from a year earlier, and private home prices gained 0.7 per cent year-on-year.

HDB, private home prices rise in Q3, defying recessionary pressures

The prices of both resale HDB flats and private property units shrugged off the challenging economic conditions to post rises in the third quarter of 2020.

  • HDB resale prices rose 1.4 per cent in the third quarter of the year from 2019
  • Private home prices grew 0.8 per cent in the same quarter
  • Analyst pointed to the pent-up demand from homebuyers unable to view property in the second quarter
  • Various government measures, BTO project delays and general investor confidence were also factors driving demand


SINGAPORE — Property prices have continued to beat expectations despite the economic downturn. Prices of Housing and Development Board (HDB) resale flats rose 2.1 per cent in the third quarter from a year earlier, and private home prices gained 0.7 per cent year-on-year.

Analysts noted that demand for homes has spiked substantially in the past three months since the end of the circuit breaker in June when stay-home curbs were lifted, and said that the Government's stimulus measures and past property curbs may have played an instrumental role in keeping home prices up during the economic headwinds.

The unabated flurry of transactions from mid-June, when property viewings were allowed to resume, continued to drive demand for homes, suggesting that the euphoria over Singapore’s ongoing second phase of its economic reopening has yet to subside, they said.

Quarter-on-quarter, HDB resale prices rose by 1.4 per cent, the largest quarterly increase in at least six years, flash estimates released by HDB on Thursday (Oct 1) showed.

This is the fifth straight quarterly gain in the price index, which analysts said was further proof that the market has started to stabilise after six years of decline from 2013 to 2018.

Based on data tracked by real estate agency PropNex, HDB resale flat transactions are on track to hit 7,000 units for the quarter. Ms Wong Siew Ying, the firm’s head of research and content, said that this would make it the strongest quarterly showing since the third quarter of 2018.

Private property values rose 0.8 per cent in the three months ended Sept 30 in quarter-on-quarter terms, the highest quarterly rise since the third quarter of last year, the Urban Redevelopment Authority’s preliminary estimates on Thursday showed.

The figures come on the back of an 11-month high in home sales in August, defying the usual market lull during the month of Hungry Ghost Festival on the Chinese calendar that ended mid-September.


1. Government measures

Ms Christine Sun, head of research and consultancy at property firm OrangeTee & Tie, said that stimulus packages totalling more than S$100 billion to prop up the economy during Singapore’s worst recession as well as past cooling measures have helped to keep HDB prices up.

“The mortgage servicing ratio, which was imposed to tighten the disbursement of housing loans, may have prevented buyers from overleveraging and selling their flats at excessively low prices during the current market slowdown,” she said.

Mr Lee Sze Teck, director of research at real estate firm Huttons Asia, said that revisions in government policies last year have also continued to drive the market as homebuyers are now looking at resale flats more favourably.

He noted that the raised income ceiling and higher grants for first-time buyers announced in September last year for those applying to buy a resale flat continued to boost demand. He expects prices to continue appreciating in the current fourth quarter.

2. Delay in BTO housing projects

Analysts said that the expected delay in Build-to-Order (BTO) public housing projects due to the halt in construction work during the two-month circuit breaker period in April and May has also diverted some demand to the resale market.

Ms Sun said: “Some buyers have also bought HDB resale flats that were more affordable than private homes during the current economic uncertainties.”

Ms Wong of PropNex estimated that HDB resale prices could rise as much as by 3 per cent for the whole of this year.

“We think the signs are positive and point to further stabilisation in values,” she said.


1. Relief measures

The gains in private home prices were led by landed property, which surged 3.8 per cent in the past three months, as well as by property outside of the core central region, which refers to the prime districts.

Various temporary relief measures have also removed the need for homeowners and developers to slash prices too drastically to move sales, Ms Sun said.

These measures include the waiver of charges for developers applying to extend their completion or disposal deadlines as well as allowing borrowers to defer their loan repayments.

Ms Sun also said that market sentiment may continue to improve and demand for properties may remain strong in the coming months, as more sectors reopen and the country eases into the third phase of reopening the economy. 

2. Investor confidence

PropNex's chief executive officer Ismail Gafoor believes that investors remain confident in the market, even as the recent clampdown on the re-issue of options to purchase for buyers may have a slight cooling effect on demand.

“Several factors probably prompted buyers to action, including the low interest rates, liquidity in the system, sensitive pricing by developers and re-sellers, and the buyers’ faith in the positive outlook of the property market over the long term,” he said.

Mr Leonard Tay, head of research at real estate company Knight Frank Singapore, said: “This is a little bit reminiscent of 2009 when the private residential market in Singapore witnessed a fast and furious recovery in the midst of the global financial crisis, where prices and sales volumes rebounded in a time of uncertainty.

“Perhaps in a somewhat similar manner, overall private home prices that were originally expected to fall by about 5 per cent in 2020, would now generally remain unchanged from end-2019.”

Related topics

property HDB resale private home

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