The Bulletin: Singapore HDB Resale Market 3Q 2019

Source: HDB, ERA Research & Consultancy


The private residential property market continued to expand in the third quarter with steady growth in prices and sales volume in the primary and secondary market. In the same period, the HDB resale market continued to show signs of stability as the overall price index of HDB resale flats increased marginally, while resale transaction volume was largely unchanged from the previous quarter.

HDB Resale Market 3Q 2019

HDB Resale Price
The HDB resale price index has declined since the middle of 2013 when the government reduced the Mortgage Servicing Ratio to 30% for mortgages for HDB flats. The 6-year downward trajectory had been punctuated by brief periods when the price index either remained unchanged or staged a marginal increase.
In the third quarter of 2019, the price index increased by 0.1% quarter-on-quarter (qoq). The slight rise in HDB resale price index could indicatethe stabilizing of resale prices. This came after two major announcements by the government, namely the introduction of the Enhanced Housing Grant on 10 September 2019, and the amendments of the regulations governing the use of homebuyers’ CPF funds for the purchase older HDB flats, which took effect on 10 May 2019. The latter would have also contributed to more demand and supported the resale prices of older flats.

HDB Resale Volume
The number of total resale applications registered in 3Q 2019 remained flat with a marginal decrease of 0.2% qoq compare to 2Q 2019. 6,264 resale HDB flats exchanged hands in the third quarter.
Seasonal effect could be the underlying reason for this minor dip in resale volume. In the past 10-year period of 2010 to 2019, the HDB resale volume in the July to September period was lower than the 2Q resale volume in 8 out of the 10 years. As such, 2014 and 2018 were the only two exceptions with higher HDB transaction volume in the third quarter compared to the preceding quarter. This is because the Hungry Ghost Festival, where there is a traditional lull in the real estate market, always falls in the third quarter every year.


HDB Rental Market

The number of approved applications to rent out HDB flats also slipped marginally by 2.7% qoq to
12,006 flats in 3Q 2019 due to season effects.
Similar to the seasonal pattern observed for the number of HDB resale applications, there was also an 80% chance that the rental volume in the third quarter would be lower than that in the second quarter in the past 10 years.
However, the HDB rental market was more active in the first nine months of this year. A total of 36,116 flats were approved for subletting, which was 3.3% higher than the rental trans


HDB Resale Market Outlook
In 2020, an estimated 26,000 new HDB flats willreach the 5-year MOP period and will be allowed to be sold in the resale market by the flat owners.This is about 50% higher than the 5-year average of 17,400 flats that reach the MOP period annually.
These newer flats are typically able to fetch a higher price in the resale market, compared to older flats in the same neighbourhood. The higher potential transactions of these flats could add to the upwards momentum of the HDB resale price index.

Furthermore, the combined effects of the Enhanced Housing Grant and changes in CPF rule for the purchase of older HDB flats will continue to support the prices of HDB resale in the near future.
The upwards momentum could be balanced by the headwinds from the effects of the global economic uncertainties. Therefore, the HDB resale price index could still increase in 2020 but at a modest pace of about 1% year-on-year (yoy).

Source: HDB, ERA Research & Consultancy