HDB resale prices rise 5.9% in first half of 2021, with new high expected in second half of year

• The Housing and Development Board’s early estimates show a 2.8 per cent rise in prices in the resale market in the second quarter of 2021
• Continued delays to BTO projects, demand for resale flats in attractive locations are behind the increase, analysts said
• Private property prices inched up by 0.9 per cent in the second quarter

SINGAPORE — Prices of Housing and Development Board (HDB) resale flats rose by 5.9 per cent in the first half of this year, based on government estimates, with analysts expecting the market to reach a new high in the second half of the year. 

HDB’s early estimates released on Thursday (July 1) showed that resale prices in the public housing market climbed by 2.8 per cent in the second quarter of this year, compared with the first quarter. 

This is the fifth consecutive quarter of increase. 

In the first quarter of this year, prices went up by 3 per cent, compared with the fourth quarter of last year. 

WHY ARE HDB RESALE PRICES ON THE RISE? 

Delays to Build-to-Order (BTO) housing projects owing to restrictions brought on by the Covid-19 pandemic and high demand for resale properties in attractive locations have led to the continued rise in prices, property analysts said. 

Ms Christine Sun, senior vice-president for research and analytics at real-estate firm OrangeTee & Tie, said that construction delays for new BTO flats have led many couples to seek housing in the secondary market. 

Buyers downsizing from private properties have also turned to the HDB resale market, she said. 

Ms Sun added that because of the high demand for and supply crunch in the resale market, “bargains were fading”. 

This has led buyers to snap up resale flats once they spot a home that interests them, especially if it is in a popular location. 

“With many eager buyers willing to match the valuation of properties, prices of resale flats are creeping up in many areas.” 

Still, Mr Nicholas Mak, research and consultancy head at real-estate agency ERA Realty, noted that HDB resale volumes fell by 14.1 per cent from April to June, when 6,513 flats changed hands. 

He said that some buyers could have held off their purchases owing to the effects of the Phase Two (heightened alert) imposed to arrest the spread of Covid-19 from May 16 to June 13. 

“Buyers and sellers who were not in a rush would rather delay their property purchase until when the Covid-19 situation improves and restrictions are lifted.” 

WHAT’S THE OUTLOOK FOR THE HDB RESALE MARKET?

Analysts expect HDB resale prices to creep above the peak observed in the second quarter of 2013 later this year. 

Right now, HDB resale prices are 2.1 per cent below the peak in 2013, said Ms Sun. 

“Given the current pace of price increase, resale prices are likely to reach a new high by the second half of this year,” she said. 

Agreeing, Mr Mak said that at this rate, the HDB resale market might set a new record in a quarter or two.

He predicts that HDB’s resale price index, which provides information on general price movements in the resale public housing market, could expand by 8 to 11 per cent year-on-year in 2021.

It rose by 5 per cent last year. 

Ms Sun said that the fast-rising prices could raise the barrier to entry for first-time buyers. 

Couples who cannot afford an HDB resale flat may have to turn to the rental market, or delay their weddings and apply for BTO flats. 

In a statement on Thursday, HDB said that next month, it would offer about 4,900 BTO flats in Hougang, Jurong East, Kallang/Whampoa, Queenstown and Tampines. 

In November, 3,100 to 3,600 BTO flats will be opened up to the public in Chua Chu Kang, Hougang, Jurong West, Kallang/Whampoa and Tengah. 

WHAT ABOUT PRIVATE PROPERTY PRICES?  

Early government estimates showed that private property prices inched up by 0.9 per cent in the second quarter, less than the 3.3 per cent increase in the first three months of the year. 

The slower pace of price increases could be due in part to measures imposed during Phase Two (heightened alert), which tightened restrictions on showflat visits and property viewings, said analysts. 

Dr Tan Tee Khoon, country manager at property portal PropertyGuru Singapore, said that because of this, developers chose to err on the side of caution and postponed their projects that were ready to be launched. 

New home sales dipped by 2.6 per cent in April and 30 per cent in May, he noted. 

Yet Mr Leonard Tay, head of research at property consultancy Knight Frank Singapore, said that demand for private property remains strong.

This is because many homeowners who sold their HDB flats in the resale market would be looking to upgrade to a private property. 

“The proceeds from the resale of HDB flats have enabled households to make that transition into the private residential market,” he said. 

He said that this year, overall private residential prices were projected to rise by more than 5 per cent year-on-year but would likely not surpass 10 per cent.

Prices climbed by 2.2 per cent last year. 

Monetary Authority of Singapore chief Ravi Menon said on Wednesday that the authorities have been keeping a close watch on the continued rise of property prices. 

He noted that a prolonged divergence between housing prices and incomes was unsustainable. 

More detailed data on resale public housing and private property prices will be released on July 23.