HDB Resale Prices End 31-Month Rally

HDB resale prices have stopped its uptrend for the first time since June 2020 according to flash figures released by SRX and 99.co. It was observed that the prices of larger flats fell, with the resale prices of five-room flats and executive flats dropping 0.8 percent and 0.3 percent respectively. 

Property analysts have explained the decline was likely due to lower demand from private home buyers or downgraders who have been affected by the new 15-month waiting period requirements. The smaller three-room flat prices grew 0.3 percent while four-room flat prices held steady. 

Resale volumes declined to their lowest levels since May 2020, after a temporary surge in January 2023. Approximately 1,849 units changed hands in February, some 28.2 percent lower than the previous month. 

Is this the end of the rally? It may be too premature to make a call, we have to assess data for the next 1 to 2 months to see if cooling measures and rising interest rates are the reasons for the lower demand. However it is noteworthy that HDB is prepared to launch up to 100,000 flats from 2021 to 2025, if needed to meet prevailing demand. With an introduction of a large supply of flats, this will inevitably cool down resale prices and reduce the number of transacted homes. 

We note that price resistance is high among buyers as the continuous climb in prices may not be sustainable due to current economic factors and rising interest rates. 

The government’s past cooling measures in 2013 were effective in tempering HDB resale prices for consecutive 7 years coupled with consumers’ concerns on the consequences of decaying leases. After all, HDB is meant to be affordable housing and it is key to ensure Singaporeans are able to have a home.

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