No recovery yet for HDB resale demand since cooling measures: analyst

HDB sales are 11.3% lower and below the 12-month average (Photo by Neil Howard)

The HDB resale demand may have recovered in July but the figures have not returned to the trend before the December 2021 cooling measures were enforced, property analyst OrangeTee said.

Data from SRX and 99.co showed that the July 2022 HDB resale flats posted 2,363 units sold, which is a 10.5% increase from June. But OrangeTee said yearly, July figures are below the 12-month average sold.

“However, last month’s sales recovery may not be considered strong since it is below the monthly sales seen in 2021. When compared to a year ago, last month’s sales are 11.3% lower and below the 12-month average of 2,386 units from July 2021 to June 2022,” said OrangeTee in a statement.

The government’s build-to-order flats in different locations also lowered demand for HDB resale flats, OrangeTee also said.

In December 2021, the government revealed three new measures to cool down Singapore’s property market.

This includes increasing Additional Buyer’s Stamp Duty (ABSD) rates and tightening of Total Debt Servicing Ratio (TDSR) threshold and Loan-to-Value (LTV) Limit.

The government said prices for both private housing and HDB resale flats increased by about 9% and 15%, respectively, since the first quarter of 2021.

Resale market to moderate

Comments from Huttons Asia showed that the count of HDB resale transactions improved in July after a quiet season.

Sellers were more realistic in their asking price, which allowed more sales for July.

“The number of deals involving cash over valuation is getting lesser. That had resulted in a smaller price gain in July compared to June,” it said.

It also sees that the pace of price gains in the HDB resale market is moderating and will stay this way for the rest of the year.

“Transaction volume should be around 27,000 flats and prices may increase up to 10% in 2022,” the report added.

Interest rates

For One Global Group Senior Analyst Mohan Sandrasegeran, the pickup in HDB resale transactions showed signs of confidence amidst the interest rates increasing.

Sandrasegeran said the fixed interest rates by HDB still serve as a desirable and stable choice for buyers avoiding risks.

But he warns that there could be a slowdown in resale transactions once banks register hikes in interest rates or adjustments made in HDB interest rates in October.

Sale of Balance flats exercise

The unsuccessful applicants from the May Build-to-Order (BTO) and the Sale of Balance Flats (SBF) exercises may also have affected the increase in HDB resale market transactions, Sandrasegeran said.

“Unsuccessful applicants from the May BTO and the SBF exercises likely decided to switch to the resale market instead,” wrote Sandrasegeran.

The senior analyst also pointed out that couples, who are unsuccessful in the balloting for SBF exercise and immediately need a home to stay, were likely more to consider the HDB resale market.

Popular towns

According to PropNex’s analysis, flats in nonmature HDB estates accounted for more than half of the HDB resale volume in July.

Based on the flash sales, Sengkang, Punggol, and Yishun were the most popular towns for the month, accounting for a quarter of the month’s resale transactions.

Due to the rising interest rates and firm prices of resale flats in mature towns, they expect home buyers to continue to explore resale options in non-mature HDB estates.

“This demand may continue to drive a slight upside growth potential in HDB resale prices in non-mature towns,” PropNex said.

PropNex said the overall average sales of resale prices of four-room, five-room, and executive flats in non-mature towns inched up by between 0.7% and 1.7% from June to July.