Resale prices are now just 2.1% below the peak in 2Q2021 (Photo: Samuel Isaac Chua/EdgeProp Singapore)
SINGAPORE (EDGEPROP) - HDB flash estimate for 2Q2021 showed resale public housing flat prices climb a fifth straight quarter by 2.8% q-o-q. While this is slightly lower than the 3% q-o-q increase in 1Q2021, it brings the total price increase in the first half of 2021 to 5.9%, and to 10.8% y-o-y. (See also: The complete list of million-dollar HDBs and where to find them)
Resale prices are now just 2.1% below the peak in 2Q2021, says Christine Sun, senior vice-president of research & analytics at OrangeTee & Tie. She expects resale prices to reach a new high by 2H2021.
Median prices of resale flats rose in 20 out of 26 towns, according to HDB data as at June 30, 2021. Home prices hit new benchmarks in a number of locations, underscoring “the significant imbalance between supply and demand”, notes Sun.
Cash-over-valuation of $20,000 to over $30,000
“The construction delays of new Build-To-Order flats drove many couples to seek housing in the secondary market,” says Sun. “Buyers downsizing from private properties have also turned to the HDB resale market.” (See: Find HDB flats for rent or sale with our Singapore HDB directory)
More than 6,600 resale flats were estimated to have been sold in 2Q2021, based on HDB resale transaction data so far, says Wong Siew Ying, head of research and content at PropNex. The 2Q2021 sales volume is slightly lower than the 7,581 units resold in the previous quarter – due to the tighter safe management measures affecting property viewings in May 2021, and possibly some price resistance setting in, she notes.
With robust housing demand and supply shortage, bargains are fading, says OrangeTee’s Sun. “Buyers have to move quickly if they spot a home that interests them, especially for popular locations,” she continues. “With many eager buyers willing to match the valuation of properties, prices of resale flats are creeping up in many areas.”
According to PropNex Research, some locations are garnering cash-over-valuation of $20,000 to more than $30,000 amid competition for choice units.
As HDB resale prices continue on their upward trajectory, some flat owners may be motivated to sell their flat and recycle the capital to purchase a private home, reckons PropNex’s Wong. An estimated 25,500 HDB flats are due to exit their five-year Minimum Occupation Period this year, making them eligible to be sold on the resale market should the owner decide to upgrade to a private property, says Wong.
More million-dollar flats
In 1H2021, there were a total of 106 HDB flats that were sold for $1 million or more, according to Mark Yip, CEO of Huttons Asia. In comparison, there were only 82 such transactions in 2020 and 64 in 2019. “The most expensive flat sold in 2Q2021 was a 49-year-old terraced flat in Whampoa,” he notes.
If conditions continue to be buoyant, HDB resale prices could surpass their previous peak by 3Q2021, Yip observes. Huttons Asia expects HDB resale prices to increase by 8% to 10% in 2021, surpassing the gains of 5% in 2020. The number of million-dollar flat transactions could possibly exceed 200 in 2021. Still, such transactions make up “less than 1%” of the transaction volume for the whole year, he estimates.
“The upcoming BTO launches are well-located and offer a very good mix in both mature and non-mature estates,” says Yip. “The estimated construction period is unlikely to go back to pre-pandemic level and that may put some potential buyers off.”
The continued strong demand and supply shortage may keep HDB resale prices elevated in the coming months. “The fast-rising prices may raise the barrier of entry for some first-time buyers,” says Sun. “Those who cannot afford an HDB resale flat may either turn to the rental market or delay their wedding plans as they apply for BTO flats.”