HDB Resale Price Index
HDB resale prices picked up in the second quarter of this year, data released by HDB showed. Prices increased for the 13th consecutive quarter, rising by 1.5 per cent in Q2 after growing 1 per cent in the preceding quarter. Although prices rose faster last quarter, it is still below the average quarterly increase of 2.3 per cent from Q1 2020 to Q4 2022.
The highest price increase was for 1-room flats, which increased by 3.6 per cent from a median price of S$237,000 in Q1 2023 to S$245,500 in Q2 2023, followed by executive flats which rose by 2.3 per cent from S$800,000 to S$818,000 over the same period, according to data.gov.sg. Prices of 5-room flats climbed by 1.9 per cent from S$638,000 in Q1 2023 to S$650,000 in Q2 2023, while those of 4-room flats increased 1.5 per cent from S$537,000 to S$545,000.
The median price of flats increased in 18 out of 26 towns in Q2 2023. Geylang registered the biggest price growth of 19.2 per cent from Q1 2023 to Q2 2023, followed by Ang Mo Kio at 8.4 per cent, Central Area at 6.8 per cent, and Bukit Panjang at 6.1 per cent.
Resale Volume
The total resale volume dipped by 6.7 per cent from 6,979 units in Q1 2023 to 6,514 units in Q2 2023. This is the lowest volume since Q2 2020, when 3,426 units were sold during the national lockdown Circuit Breaker Period at the pandemic's start. Demand was considered resilient in the last quarter, considering that cooling measures were implemented in September 2022. Demand could have been sustained by more grants given to first-timers purchasing resale flats.
The number of 4-room flats rose from 2,956 units in Q1 2023 to 2,970 units in Q2 2023. Private property downgraders might have driven demand for 4-room flats higher as buyers above 55 years old are exempt from the 15-month wait-out period if they were to buy 4-room or smaller flats. HDB upgraders priced out of the private market may have bought these resale flats.
Rental
According to the HDB public housing data for Q1 2023, the approved applications to rent out HDB flats rose by 1.9 per cent from 9,657 units in Q1 2023 to 9,842 units in Q2 2023.
Rental demand increased as some tenants shifted downstream from renting private properties to HDB flats as rent prices have been increasing islandwide, and many are looking for cheaper accommodation. However, rents may face some downward pressure since more flats have been completed, and those who were renting will shift into their premises. There will also be more competition from more private homes being completed.
Outlook
Some demand may be diverted to the BTO market since HDB will continue to launch new flats in various locations in the second half of this year. Some first-timers may be enticed as HDB will launch more flats in mature estates like Kallang/ Whampoa, Queenstown, Bedok, and Bukit Merah, which are typically popular with buyers.
As stricter rules will be imposed for the non-selection of BTO flats from August 2023, first-timers who fail to obtain a BTO flat will likely turn to the resale market, thus sustaining demand in the second half of this year.
We estimate that overall prices may rise by 4 to 6 per cent, while around 25,000 to 27,000 resale flats could be transacted in 2023.