HDB resale volume dips in October following property cooling measures; first drop in 8 months

SINGAPORE — In the month following the Government's latest property cooling measures, the number of Housing and Development Board (HDB) resale flats transacted has dipped for the first time in eight months, declining by nearly a quarter.

Still, HDB resale prices in October climbed for the 28th consecutive month, though at a much slower pace of 0.5 per cent, compared with 1.3 per cent in September.

The lower number of resale units transacted did not come as a surprise to industry observers such as Mr Mark Yip, chief executive officer of real estate agency Huttons Asia, who said that this could likely be a "knee jerk reaction" from homebuyers who held back from buying a HDB resale flat after the cooling measures.

However, the full effects of the measures on monthly transaction volume may not yet be clear, as it typically takes some time, other analysts said.

The Government announced on Sept 30 a slate of cooling measures, which included requiring private property owners to serve a temporary wait-out period of 15 months after selling their homes before they are allowed to buy a non-subsidised HDB resale flat.

This has scuppered plans made by some private property owners to sell their homes and downgrade to HDB flats.

DROP IN MONTHLY TRANSACTION VOLUME

Data jointly released on Thursday (Nov 3) by real estate portals 99.co and SRX showed that a number of 1,965 HDB resale flats were transacted in October, a 24.1 per cent drop from September. 

Breaking it down by unit type, the transactions came from:

• Three-room flats (23.7 per cent)
• Four-room flats (41.9 per cent)
• Five-room flats (26.1 per cent)
• Executive flats (6.8 per cent)

Breaking it down by estate, the transactions came from:

• Mature estates (42.3 per cent)
• Non-mature estates (57.7 per cent)

Mr Pow Ying Khuan, 99 Group’s head of research, noted that the monthly transaction volume was the lowest recorded in the month of October since 2017.

However, this may not be due to the cooling measures rolled out by the Government, since it typically takes about eight weeks for an HDB sale to complete, he said.

Mr Yip of Huttons Asia said that there could be other factors causing the decrease in volume, such as a degree of price resistance from buyers.

He pointed to how the median price of an HDB resale flat is at an all-time high at S$545,000, or 34.6 per cent higher than its pre-pandemic level in October 2019 when the median price was S$405,000.

“Some may (also) be waiting for the largest Built-To-Order (BTO) flats launch (in 2022) in November where there is a good mix across mature and non-mature estates.”

OUTLOOK FOR HDB RESALE FLAT MARKET

Overall, HDB resale prices increased marginally by 0.5 per cent in October, compared with September’s 1.3 per cent. The prices also increased 10.8 per cent compared with October 2021.

Breaking it down by unit types, the year-on-year increase in prices were:

• Three-room flats (10.7 per cent)
• Four-room flats (10.6 per cent)
• Five-room flats (11.6 per cent)
• Executive flats (11.1 per cent)

Breaking it down by estate, the year-on-year increase in prices were:

• Mature estates (10.4 per cent)
• Non-mature estates (11.1 per cent)

Analysts who spoke to TODAY said that it is too soon to say whether the decline in HDB resale transaction flats is a serious moderation in the HDB resale market and that the market should be observed for another one to two months to make a more accurate analysis.

Ms Christine Sun, OrangeTee and Tie's senior vice-president of research and analytics, said that the data in October included appeal cases and options issued before the cooling measures, so the sales number may not reflect the full impact of the measures. 

HDB said last month that it had waived the 15-month wait-out period requirement for 220 private homeowners who had obtained an option to purchase a HDB resale flat before the measures were announced.

These 220 cases were among 650 appeals that the board has received from current and former private home owners who had trouble getting a HDB flat due to the new regulation.

Analysts also expect that the prices of four-room and smaller flats to continue climbing because the cooling measures have mainly affected demand for five-room and bigger flats.

Buyers aged 55 and above, along with their spouses, would not be affected by the new wait-out period if they are moving from their private property to a four-room or smaller resale flat.

Ms Sun added: “Demand for bigger flats may continue to experience a temporary pullback since some private homeowners may be put off by the long waiting period and no longer wish to buy a resale flat. 

“However, some young couples or upgraders looking for resale flats may still purchase big flats when the prices moderate or stabilise.”