July 22, 2022

HDB resale prices rise 2.8% in Q2, transactions fall amid rising interest rates

By brit

SINGAPORE – Prices in the Housing Board (HDB) resale market have continued to climb, logging gains for the ninth consecutive quarter even as sales momentum slipped.

Resale prices rose at a quicker pace of 2.8 per cent in the second quarter of this year, compared with 2.4 per cent in the first quarter, showed data released by HDB on Friday (July 22).

This is likely due to HDB resale flat prices being at a record high, said PropertyGuru Singapore country manager Tan Tee Khoon.

Delays in construction of Build-To-Order (BTO) flats and the buying preference for larger HDB flat types could be driving the growth in prices, he added.

“Until BTO construction delays are fully alleviated and completion times shortened, young families continue to be pushed towards the HDB resale market,” Dr Tan said.

However, Huttons Asia senior director of research Lee Sze Teck noted that more buyers are resisting paying higher prices.

“It has been observed that there is an increasing number of resale flats whose transacted price matches the valuation price, leading to zero cash over valuation (COV),” he said.

COV is the amount a buyer has to pay in cash when a resale flat is sold above its actual HDB valuation. If the valuation is lower than the sale price, the COV must be paid in cash, not from grants, CPF savings or home loans from HDB or the bank.

A total of 6,819 HDB resale flats changed hands in the second quarter of the year, down 1.7 per cent from 6,934 in the previous quarter – marking the third consecutive quarter of declining transactions.

Compared with the second quarter of last year when 7,063 HDB resale flats were sold, transactions were 3.5 per cent lower.

Mr Lee said the dip points to signs of the market losing momentum, and noted that it is the lowest quarterly sales since the circuit breaker in the second quarter of 2020.

One Global Group senior analyst Mohan Sandrasegeran said this could be attributed to the overwhelming response for BTO and Sale of Balance flats launched in May, as well as the June school holiday seasonal lull.

The second quarter saw 83 HDB resale flats change hands for at least $1 million, on par with the 83 in the first quarter.