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Q1 HDB Resale Prices Stabilize with a 0.9% Increase, Marking the Slowest Quarterly Growth Since 2020

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In Q1 2023, the Housing and Development Board (HDB) resale prices rose by 0.9%, a significant decrease compared to the 2.3% growth recorded in the previous quarter, based on the HDB flash estimates published on Monday (April 3). This is also the smallest increase since Q2 2020 when prices rose by only 0.3%. The HDB resale volume for Q1 2023 is 6,880 cases, up by 1% from the same period last year, which had 6,810 cases.

Eugene Lim, the key executive officer of ERA, noted that HDB buyers are becoming more cautious in raising their bids after their initial offer has been rejected by the seller. This is mainly due to the higher cash overvaluation that may be incurred with a higher purchase price. Additionally, with the loan-to-value limit lowered to 80% for a loan from HDB, buyers with insufficient Central Provident Fund (CPF) funds for the 20% deposit would need to pay more in cash. Lim added that buyers who are not eligible for an HDB loan would have to pay more than 4% in interest on floating rate bank loans.

HDB has revealed its plan to launch 5,400 Build-To-Order (BTO) flats in May, with locations including Bedok, Kallang Whampoa, Serangoon, and Tengah. Additionally, in the August BTO launch, HDB will offer between 5,200 and 6,200 flats in Bukit Merah, Choa Chu Kang, Kallang Whampoa, Queenstown, and Tengah. The actual numbers of flats offered in both launches may be subject to review as more details on the projects become available closer to the launch dates. HDB will continue to monitor housing demand and is prepared to launch up to a total of 100,000 flats from 2021 to 2025.

According to Huttons senior research director Lee Sze Teck, the flats available in these launches may have a shorter waiting time and could attract some buyers away from the resale market. The higher interest rates in 2023 may also discourage buyers from the resale market and prompt them to apply for a BTO flat. Based on data as of March 31, Lee noted that there is an increase in the number of HDB towns experiencing quarterly price declines.

In Q2 2022, only three HDB towns experienced a decline in quarterly prices, but this number increased to seven in Q3, 10 in Q4, and 12 in Q1 2023. Bukit Panjang, Kallang/Whampoa, and Tampines were the HDB towns that experienced two quarters of price declines. Despite the trend of HDB resale prices flattening, data as of March 31 shows that there were 101 million-dollar flat transactions in Q1.

According to Lee, the cooling measures implemented on private property owners did not appear to have reduced the number of million-dollar flat transactions. In fact, the estimated number of million-dollar flat transactions in Q1 2023 is 9.8% higher than Q4 2022 and 21.6% higher than last year.

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