HDB resale prices at an all-time high after 2.9% increase in Q3

Analysts said there are three factors that drove the price growth.

HDB resale prices rose for the sixth consecutive quarter in the third quarter (Q3) by 2.9%, reaching an all-time high of 150.6.

Q3 2021’s resale price index (RPI) surpassed the previous peak of 149.4 recorded in the second quarter (Q2) 2013 by 0.8%.

Analysts from Property Guru analysts said the increase in HDB resale prices was driven by three factors.

Million-dollar HDB flat transactions

The first factor is the million-dollar HDB flat transactions recorded in Q3. 

It was reported that there were 67 HDB flats worth millions that were sold in Q3 and amongst them were a 5-room flat in Bishan which changed hands for S$1.295m in July 2021, and another 5-room flat in Toa Payoh sold for S$1.238m.

Overall, resale transactions rose by 19.4%, from 7,063 cases in Q2 to 8,433 cases in Q3.

OrangeTee analysts, for their part, said the strong resale volume was due to “demand outstripping supply in many locations.”

In its outlook report, OrangTee said 23,077 resale flat transactions were recorded in the first three quarters of 2021 which is “almost on par with the full-year sales of 2018 (23,099 units) and 2019 (23,714 units), and close to the full-year sales of 2020 (24,748 units).”

By the end of 2021, OrangeTee analysts expect that around 29,000 to 31,000 HDB flats transactions could be sold, higher than the 2020 record of 24,748 units.

“The strong buyer demand and still-lagging supply are expected to keep prices growing albeit at a slower pace next year,” OrangeTee said.

Build-to-Order flats completion delays

COVID-induced delays in the completion of Build-to-Order flats have turned buyers to the HDB resale market, according to Property Guru.
 
A report from property agency OHMYHOME showed that completion of BTO projects could take an estimated 4.4 years, “barring any unforeseen circumstances.”

“Although resale flats can be pricier as compared to BTO flats, the sale process and the waiting time generally provides an ease of convenience for aspiring buyers,” OHMYHOME  added in its report.

Willingness to pay COV

The last factor listed by Property Guru was consumers’ willingness to pay Cash Over Valuation (COV).

According to their latest consumer sentiment survey, one in three Singaporeans are willing to pay COV  for their preferred property.

“Informed HDB buyers are more likely to fork out COVs as high as S$200,000 for choice flats like those newly MOP-ed, bigger flat types in attractive locations like Queenstown and Kallang. This is especially so amid a robust HDB resale market, where we are seeing an unprecedented influx of HDB MOPs to the tune of 25,000 flats,” Property Guru reported.

Despite the increase in numbers for Q3, experts from Property Guru see a slight slowing down of the HDB release market, noting that quarterly RPI has been consistently at least 3%.
 
They said Q3’s RPI was the lowest recorded since the fourth quarter of 2020.