HDB Resale Price Index continues to see decline in Q4 2018

HDB’s flash estimate of the 4th Quarter 2018 Resale Price Index (RPI) is 131.4, a decline of 0.2% over that in the 3rd Quarter 2018. Based on the flash estimate, the decline in resale flat prices for the whole year of 2018 is 0.9%. HDB said that its Resale Price Index provides information on the general price movements in the resale public housing market.

HDB said that the Resale Price Index for the full quarter, together with more detailed public housing data, will be released on 25 January 2019.

A research report released by OrangeTee & Tie in November suggests owners need not be overly concerned about the declining Resale Price Index as the HDB resale market is currently performing better than it did in 2017. The prominent real estate services company added that it expects the HDB resale market to remain positive in 2019. The report noted that HDB resale market outperformed market expectations as the number of HDB resale applications rose 18.9 per cent q-o-q to 7,063 units in Q3 2018.

According to HDB’s third quarter public housing data, 17,462 resale applications were received in the first three quarters of this year, hitting a five-year high. The total number of resale transactions is poised to surpass 22,000 this year, likely a new high since 2013.

The agency said that the better sales performance could be attributed to less BTO flats being launched this year, resulting in less competition for potential buyers. It noted that some displaced enbloc owners may have turned to the HDB resale market for replacement homes for their size and affordability.

The report said that although HDB resale prices have been on a general downtrend in recent years, prices of HDB resale flats have been fluctuating within a -1 per cent and 1 per cent q-o-q change since Q2 2015. Using the HDB resale price index, prices of HDB resale flats slipped marginally by 0.1 per cent q-o-q in Q3 2018. For the first three quarters of this year, prices have dipped 0.8 per cent.

Despite the general weakness in resale price index, the number of HDB resale flats sold ≥S$700,000 reached a seven-year high in the first three quarters of 2018, with the number of million-dollar HDB resale transactions continuing to rise as well – reaching an all-time high with 52 flats being transacted in Q1-Q3 2018.

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OrangeTee said that in recent years, there has been a large supply of new BTO flats in Punggol and Sengkang but the increased competition did not affect market activities in those towns. Instead, the resale volume remained high in these towns and bigger flats have seen price increases compared to a year ago.

“The number of million-dollar HDB resale flat transactions reached an all-time high with 52 units being sold this year. An HDB terrace was transacted at nearly S$1.2 million in September, setting a new record,” said Christine Sun, Head of OrangeTee & Tie Research & Consultancy.

“Non-matured towns tend to have more resale transactions in Q3 2018. Sengkang (528 units) had the most resale transactions, followed by Woodlands (516 units), Jurong West (505 units) and Punggol (469. The resale market is more active in the non-matured towns possibly due to more flats reaching their Minimum Occupation Period (MOP) in recent years.

Based on data from data.gov.sg downloaded on 30 October 2018, the number of HDB resale flats sold for ≥ S$700,000 reached a six-year high in the first three quarters of this year with 1,438 transactions (Chart 4). This is a 22.8 per cent y-o-y increase from the 1,171 flats sold in Q1-Q3 2017. Compared with Q1-Q3 2013, the number of resale transactions rose 68.6 per cent from the 853 units.

The number of flats sold ≥ S$1 million and above also reached an all-time high with 52 units transacted in the first three quarters of this year. 40 of these were below 20 years old and 12 units were older than 20 years old (Table 1). 11 (i.e. 9 Improved model, 2 Model A) of the 52 units are standard flats* while 41 are non-standard flats (i.e. 16 DBSS, 12 Type S2, 5 Maisonette, 4 Apartments, 3 Type S1, and 1 Terrace).

A 237 sqm HDB terrace at Jalan Bahagia hit a new record price of S$1.185 million in September this year, smashing the previous S$1.18 million record set by a 5-room Bishan DBSS unit sold in Feb 2017. The third priciest unit on record was also transacted in Q3 2018 for a 5-room 117 sqm DBSS unit at Lor 1A Toa Payoh sold for S$1,160,888 in August this year. From Q1-Q3 2018, 69 standard* flats and 168 non-standard flats were sold for ≥S$900,000. In the first three quarters of 2016 and 2017, only 39 and 40 standard flats were sold for ≥ S$900,000.”

As for mature estates, OrangeTee noted that almost all towns saw an increase in HDB resale transactions when compared to five years ago.

“Central Area had the largest 119.7 per cent increase in transactions while Ang Mo Kio, Bukit Merah, Clementi, Kallang/Whampoa, Marine Parade, Pasir Ris, Queenstown, Serangoon, Tampines and Toa Payoh had between 20 and 35 per cent increases. Sales volume rose possibly due to a moderation in prices for some flat types. 5-room flats had more y-o-y price gains than losses while 3-room flats experienced more losses than gains in Q1-Q3 2018.”

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For non-mature estate, the number of resale applications in Punggol rose 334.4 per cent from 276 units in Q1-Q3 2013 to 1,199 units in Q1-Q3 2018, said OrangeTee.

“Sengkang saw the next highest 58.3 per cent increase to 1,244 units in Q3 over the same period. The high transactions could be attributed to many BTO flats being built in both towns and have now reached the five-year MOP for resale. There are also many private condominiums built in these areas that might have spurred more HDB owners to upgrade to a private condominium. Transactions remained high at Woodlands (1,195 units) and Jurong West (1,229 units) in the first three quarters of this year. Despite the big supply of HDB flats in Sengkang and Punggol, the 4 and 5-room flats in these town saw y-o-y price increases in Q1-Q3 2018.”

The HDB resale market saw flats in Bukit Batok, Jurong West, Choa Chu Kang, Woodlands and Yishun experience price falls across all room types over the same period. The report suggested that resale volume may increase further to about 24,000 units in 2019, and that due to the increased supply of resale flats, HDB resale prices may continue to see weakness next year due to an increased competition for buyers from more flats reaching Minimum Occupation Period.

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