Updated CPF, loan rules give HDB resale market 'new lease of life': OrangeTee

HDB resale transactions jumped 29.8 per cent from the previous quarter to 6,276 units in Q2 2019 - marking the first increase in sales volume since Q3 2018

Wed, Aug 07, 2019


DEMAND for older HDB flats in Singapore spiked in the second quarter this year, following policy updates that may have given a "new lease of life" to the overall HDB resale market, OrangeTee & Tie said on Tuesday in its latest report on HDB trends.

Some 564 HDB flats that were 40 years old and above were sold in May-June this year, a 40 per cent surge from 403 units in the year-ago period, while resale transactions for flats between 30 and 40 years old rose 10.4 per cent to 1,219 units.

In early May, the government updated rules on Central Provident Fund (CPF) usage and HDB housing loans. Homebuyers now have greater flexibility to use their CPF to pay for the properties and may obtain larger housing loans as long as the remaining lease of the property can cover the buyer till the age of 95.

Total HDB resale transactions grew 29.8 per cent from the previous quarter to 6,276 units in Q2 this year - marking the first increase in sales volume since Q3 2018.

For the first six months of this year, there were 11,111 HDB resale transactions, up 6.8 per cent from a year ago.

While the second quarter usually sees an uptick in sales activity, total transactions for Q2 2019 also increased 5.6 per cent year on year.

"This indicates that apart from a seasonal effect, the recent (rule) changes may have been a major catalyst that spurred buying demand last quarter," OrangeTee said.

The policy changes were meant to improve the liquidity of the resale market and make it easier to buy and sell older flats.

As for younger flats below 10 years old, their sales volume also increased substantially in Q2, although this may be attributed more to a surge in housing supply of flats reaching their five-year minimum occupation period (MOP) rather than the policy changes, OrangeTee said.

In terms of market share, older flats have also taken a larger slice of the pie during May-June.

Flats aged 30 years and above made up 44.9 per cent of total resale transactions during the period, up from 40.6 per cent in May-June last year. Of these, flats aged 40 years and above increased their market share to 14.2 per cent, from 10.8 per cent a year ago.

Conversely, the market share of younger flats between 10 and 30 years old shrank to 35.8 per cent from 43.4 per cent a year ago.

Larger, older HDB flats also saw a greater surge in sales volume compared to younger and smaller flats.

Sales of four-room and five-room flats - both aged 40 and above - respectively climbed 53.5 per cent and 54.5 per cent from a year ago.

On the other hand, sales dipped for flats between 10 and 30 years old, across all flat sizes.

Mature estates Bukit Batok, Geylang and Bedok saw the biggest year-on-year increase in resale transactions for flats of 30 years and older, up 46 per cent, 31 per cent and 29 per cent respectively in May-June.

Due to the improving sentiment and revival of buying interest for older flats, the pace of decline of HDB resale prices slowed marginally to 0.2 per cent in Q2, compared to the 0.3 per cent drop in Q1.

"While this is the fourth consecutive quarterly decrease, prices dipped less than 1 per cent in the past year, indicating that the price decline has largely stabilised," OrangeTee said.

It added that although sales volumes in the resale market may rise in the coming months, a price recovery may not be as quick, given the growing supply of HDB resale flats and the influx of HDB flats reaching their MOP this year.

Its full-year price forecast for 2019 is between -1 and -2 per cent for HDB resale flats.