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Here’s what happened in Singapore’s HDB market in 3Q 2019

A number of key announcements were made this year with regard to the HDB market, and the property market is finally seeing the effects of it. Here’s what happened, according to OrangeTee & Tie Research.

 

Prices of resale flats rose across many towns in Q3 2019 (while a slower pace of price depreciation was observed for younger and older flats)

 

Buoyed by generous incentives and a slew of policy initiatives dished out by the government, demand for resale flats continued to be sustained in the third quarter of this year. Demand for flats remained resilient with more than 6,000 units being transacted last quarter. Flat prices have also improved last quarter. Based on the HDB resale price index, prices of resale flats rose slightly by 0.1 per cent from the second quarter of this year.

An analysis of HDB resale transactions downloaded from data.gov.sg seemed to indicate that resale prices had increased across many towns and for flats of different ages. Prices of flats between 10 and 40 years rose in Q3 2019 as compared with Q3 2018. For instance, flats between 10 and 20 years old saw a 1.9 per cent q-o-q increase in Q3 2019, which was higher than the 1.3 per cent q-o-q increase in Q3 2018. For flats between 20 and 30 years old, there was a 1.2 per cent q-o-q increase in Q3 2019, as opposed to the 0.6 per cent q-o-q decline in Q3 2018.

While prices of younger flats below 10 years old and older flats aged 40 years and above had continued to decline q-o-q in Q3 2019, the rate of depreciation had slowed down significantly as compared with the same period in 2018. For older flats, prices declined 0.9 per cent q-o-q in Q3 2019, as opposed to a 3.4 per cent dip in Q3 2018. The slower price depreciation seemed to indicate that sentiment towards older flats might have improved in recent months. Similarly, for younger flats, prices fell at a slower rate of 2.5 per cent q-o-q in Q3 2019 as compared with the 4.8 per cent decrease in Q3 2018.

 

Prices of resale flats rose in Q3 2019 for those between 10 and 40 years old

Age of flat

Q2 2019

Q3 2019

% change

Average transaction price in SGD

<10 yr old

$481,427

$469,412

-2.50%

10 to <20 yr old

$474,501

$483,533

1.90%

20 to <30 yr old

$466,144

$471,702

1.20%

30 to <40 yr old

$401,098

$403,241

0.50%

≥ 40 yr old

$340,188

$337,293

-0.90%

Total

$432,433

$432,883

0.10%

Source: Data.gov.sg, OrangeTee & Tie Research & Consultancy

Prices of resale flats had picked up in various locations across the island. For example, prices of flats that were 20 years but under 30 years old in Ang Mo Kio rose 43.0 per cent q-o-q last quarter while flats that were 10 years but under 20 years old in Jurong East increased 21.6 per cent over the same period. At Bishan, the price of older flats above 40 years old surged 50.2 percent q-o-q.

 

Towns with the highest price increases

Age of flat

Q2 2019

Q3 2019

% change

Number of resale transactions

<10 years old

Toa Payoh

$828,464

$911,778

10.10%

Ang Mo Kio

$661,452

$711,985

7.60%

Clementi

$683,167

$733,599

7.40%

Choa Chu Kang

$326,083

$345,905

6.10%

Bishan

$974,800

$1,003,750

3.00%

10 to <20 years old

Jurong East

$461,250

$560,800

21.60%

Clementi

$612,648

$680,143

11.00%

Woodlands

$368,103

$397,538

8.00%

Geylang

$596,462

$642,214

7.70%

Central Area

$537,000

$562,600

4.80%

20 to <30 years old

Ang Mo Kio

$485,750

$694,629

43.00%

Bukit Merah

$673,486

$802,909

19.20%

Queenstown

$744,859

$818,589

9.90%

Hougang

$472,574

$518,348

9.70%

Bukit Batok

$483,805

$521,115

7.70%

30 to <40 years old

Bukit Timah

$759,462

$889,714

17.20%

Toa Payoh

$441,774

$499,900

13.20%

Central Area

$481,993

$537,589

11.50%

Kallang/Whampoa

$456,559

$503,576

10.30%

Bishan

$608,706

$658,865

8.20%

≥40 years old

Bishan

$246,000

$369,500

50.20%

Ang Mo Kio

$314,508

$351,006

11.60%

Serangoon

$290,200

$320,400

10.40%

Bukit Merah

$369,388

$397,688

7.70%

Kallang/Whampoa

$354,670

$368,012

3.80%

Source: Data.gov.sg, OrangeTee & Tie Research & Consultancy

Against a backdrop of growing economic uncertainties, the recent policy changes could be the positive catalysts behind the price growth of many HDB resale flats. The changes had likely spurred demand and instilled greater market confidence.

While prices had risen for many flat types, prices of younger flats (less than 10 years old) have continued to decline last quarter, albeit at a slower pace of 2.5 per cent. The price weakness has come on the back of more flats being sold within 10 years of completion in recent years (Chart 3). There were also more flats sold in the non-matured estates which may have brought down the overall average price of younger flats in recent years. For instance, 81.9 per cent of younger flat transactions in Q1-Q3 2019 were in the non-matured estates, as opposed to 51.5 per cent in 2015.

Based on records from data.gov.sg, the number of younger flats sold in Q3 2019 rose 12.4 per cent to 1,247 units in Q3 2019 from 1,109 units in Q3 2018. It was the highest number of new resale flats being transacted in a single quarter since Q3 2010 (1,510 units). Compared with five years ago, the number of new resale flat transactions inked last quarter was 351.8 per cent higher than the 276 units sold in Q3 2014.

 

Quarter

Number of units sold

Average resale price S$

Q1
2015

256

$592,921

Q2
2015

303

$575,989

Q3
2015

284

$584,003

Q4
2015

362

$561,669

Q1
2016

288

$538,593

Q2
2016

549

$534,148

Q3
2016

531

$533,351

Q4
2016

498

$543,459

Q1
2017

491

$538,163

Q2
2017

723

$535,639

Q3
2017

790

$540,254

Q4
2017

782

$537,580

Q1
2018

654

$535,024

Q2
2018

862

$522,310

Q3
2018

995

$496,988

Q4
2018

850

$496,619

Q1
2019

761

$488,540

Q2
2019

1109

$481,427

Q3
2019

1247

$469,412

Source: Data.gov.sg, OrangeTee & Tie Research & Consultancy

The data may indicate that more families could be ‘cashing out’ on their flats earlier to upgrade to private property or a bigger HDB flat. Some owners may have sold their flats early for fear that the value of their flats would fall with age.

With more flats reaching their five-year minimum occupation period (MOP), we may expect the number of younger flat transactions to rise further in the coming months. As competition for potential buyers may intensify with the rising supply of flats, there could be some downward pressure on the prices of younger flats.

(By ZUU online)

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