HDB resale price growth slows marginally, at 2.4% in Q3: preliminary estimates

Oct 03, 2022

According to HDB flash estimates provided on Monday, resale prices in the third quarter of 2022 increased by 2.4 percent, marking the tenth consecutive month of quarterly gain (Oct 3).

However, growth in the resale price index (RPI), which stands at 167.8 for the quarter, has slowed marginally when compared to the 2.8% rise recorded in Q2 2022. It remains lower than the 2.9 percent quarter-on-quarter increase recorded in the third quarter of 2021.

Resale prices are up 11.4 percent year on year. Meanwhile, in the first nine months of 2022, total prices increased by 7.8 percent.

According to Christine Sun, senior vice president of research and analytics at OrangeTee & Tie, the slower price rise implies that the housing market is already feeling the consequences of higher interest rates and inflation.

"Price resistance may have set in since cash-over-value (COV) appears to have decreased in recent months," she noted.

The RPI measures general price fluctuations in the resale public housing market. On October 28, 2022, HDB will reveal the complete numbers.

Huttons Asia senior research director Lee Sze Teck remarked that "quite a number" of HDB apartments were acquired with full cash by private property owners in 2022, citing ground intel.

"Some private property owners are even ready to pay larger sums of COV to secure the flat, driving up flat prices," he noted.

Lee anticipates that HDB resale prices would decrease in Q4 as a result of cooling measures, since private property owners will now be required to sell their private property and wait 15 months before purchasing a HDB resale unit.

Wong Siew Ying, PropNex Realty's head of research and content, does not expect HDB resale prices to fall considerably. Instead, the cooling measures will guarantee that price increase is more sustainable.

"We anticipate a period of impasse where would-be buyers wait for prices to fall while sellers look to hold on to their asking price," Wong said, adding that this could play out and cause resale volume to moderate slightly in the next two to three months before the market adjusts and finds an equilibrium.

In its statement, HDB stated that it intends to build up to 23,000 additional units in 2023. It would provide around 9,500 Build-to-Order (BTO) units in cities or estates like as Bukit Batok, Kallang Whampoa, Queenstown, Tengah, and Yishun in November 2022.

It will provide around 2,900 to 3,900 BTO units in towns or estates such as Kallang Whampoa, Queenstown, and Tengah later in February 2023, subject to revision as further project specifics are finalised closer to the opening date.

Lee believes that the largest-ever BTO launch in November 2022, which will include a solid mix of mature and non-mature estates, will divert some demand away from the resale market. He expects prices to fall another 1% or 2% in the fourth quarter of 2022, for a total year price gain of no more than 10%.