THE Housing Board (HDB) resale market reported record growth in 2021. According to a Friday (Jan 28) release, the HDB resale price index grew 3.4 per cent quarterly in Q4 2021. This is the highest quarterly rise since Q3 2011, and also marginally higher than the flash estimates released on Jan 3, which had indicated a 3.2 per cent increase.

Meanwhile, the whole year of 2021 saw resale prices climb a record 12.7 per cent, the highest annual increase since the 14.1 per cent increase in 2010.

Last year also saw million-dollar HDB transactions hit an all-time high of 259 sales, a sharp increase from 82 in 2020. According to Wong Siew Ying, head of research and content at PropNex Realty, there have been at least 24 such transactions in January 2022 thus far.

These million-dollar flats are also likely to have contributed to the price increases in 2021, analysts noted.

“We anticipate that the number of flats resold for at least S$1 million could remain fairly high this year. A bumper crop of more than 31,000 flats – including in popular estates such as Bukit Merah, Queenstown and Toa Payoh – are estimated to exit their 5-year Minimum Occupation Period in 2022. Some flat owners may decide to sell the flat upon reaching their MOP (minimum occupancy period) and upgrade to a private home,” Wong said.

The bullish resale market was also driven by delays in build-to-order (BTO) flats, which pushed homebuyers to look for more readily available alternatives, analysts said.

According to Tan Tee Khoon, country manager of PropertyGuru Singapore, 1 in 3 Singaporeans is willing to pay cash over valuation (COV) for their preferred property. This COV, which is the difference between the resale price of a flat and its actual HDB valuation, could reach up to S$200,000 for new and large flats in prime locations.

Tan also noted that PropertyGuru saw “no significant change in unique HDB listings” after the loan-to-value ratio was tightened to 85 per cent from 90 per cent in December 2021 as part of the government’s property cooling measures.

“Most buyers will opt for a loan from the banks as the interest rate is much lower than HDB’s interest rate,” said Lee Sze Teck, senior research director at Huttons Asia.

“HDB estates Hougang/Punggol/Sengkang, Bukit Batok/Bukit Panjang, followed by Sembawang/Yishun witnessed the largest number of transactions during this period”, Tan added.

Meanwhile, Q4 2021 saw the number of transactions fall to 7,940 sales, down 5.8 per cent from the 8,433 sales in Q3. This brings the yearly total to 31,017 units, up by 25.3 per cent from 2020.

Lee said: “If the delays in the construction industry are not resolved, the planned ramp-up in BTO supply is not going to resolve the demand and supply imbalance in the HDB resale market.”

He expects transaction volume to moderate to around 27,000 flats in 2022, with prices growing up to 8 per cent.

ERA Realty head of research and consultancy Nicholas Mak added that over 35,000 HDB flats will reach the end of their 5-year MOPs in 2022. This is 35.5 percent more than that in 2021. 

“Since these flats are newer, they might be able to fetch higher prices in the resale market compared to the older flats in the same neighbourhood. This will provide some upward pressure on HDB resale price and resale volume in 2022 and possibly 2023,” he said.

Mak estimated that the price index will rise between 4 and 8 per cent in 2022, with 25,000 to 28,000 flats changing hands.

HDB will begin this year’s BTO launches in the coming February with about 3,900 flats in areas such as Geylang, Kallang Whampoa, Tengah and Yishun. 

Source: https://www.businesstimes.com.sg/real-estate/hdb-resale-prices-climb-127-in-2021-record-growth-since-2010