Despite uncertainties and what were thought to be unfavourable conditions during the height of the pandemic, HDB resale prices have continued on their growth streak since the start of 2022. But as data from Q3 and the first month of October shows, the signs are beginning to show: the growth seems to be slowing down.
HDB resale prices growth slow in Q3 2022
According to data from the Housing and Development Board (HDB), prices of resale flats rose by 2.6% in Q3 2022, which is a slight deceleration from Q2’s 2.8% gain. In terms of sales volume, there was a 10.7% QOQ growth, bringing the number of transactions from 6,819 units to 7,546 units.
The increase in HDB resale prices is steady across the board, with median prices for the different flat categories now as follows:
- 3-room flat: $370,000 (+0.5% QOQ)
- 4-room flat: $520,000 (+2.0% QOQ)
- 5-room flat: $630,000 (+3.3% QOQ)
Compared to last year, HDB resale prices are now up 8%, and the total number of resale flats sold up until September 2022 is 21,299 units.
There are two things to note here: HDB prices and sales volume are still growing; however, the slowdown in price increase is a tell-tale sign that sales may also start to slow. The continued climb in prices and rising sale volumes show that there remains strong demand for HDB resale flats. But rising interest rates, inflation, and property cooling measures are all contributors that have softened the resale price hike.
HDB resales decline in October 2022
Now, as Q4 is slowly coming to an end, how have things changed? It seems that the cooling measures are achieving their purpose, with HDB resale numbers dropping 24.1% since September 2022. Month-on-month resale price growth has also slowed by more than half.
In particular, larger flats were the hardest hit, as the cooling measures are the most severe for flats in that category. We see this from the 1% dip in prices of executive flats – the first drop in 14 months.
Q4 2022 outlook for the HDB resale market
Overall, property analysts expect that demand for HDB resale flats will remain robust, despite the cooling measures. Total home transactions in this market are likely to surpass 28,000 for the year 2022.
However, due to the tight supply of HDB flats, some price hike is still expected, although at a slower pace in the current climate of cooling measures. Some property analysts are putting the number at a 1% to 2% growth in Q4 2022. For the year 2022, property analysts forecast total HDB resale prices to climb by 9% to 10%, but unlikely any more than that.
As buyers turn away from bigger flat types because of the cooling measures, they may divert their focus to four-room and smaller flats. Consider also that the wait-out period is not applicable to private homeowners aged 55 and above looking to downgrade to smaller flats. With these factors at play, we may see an increase in demand for smaller flat types, especially within mature estates.
This may drive prices up for 4-room resale flats in mature estates – but million-dollar prices are unlikely except for homes close to the city centre. For homes in non-mature estates, resale prices may stabilise or show moderate growth.
Another area that is predicted to see growth is HDB rentals. Healthy demand for housing will be further fuelled by homeowners in between sales – especially those in their 15-month wait-out period, or HDB upgraders selling their flat first to avoid the additional buyer’s stamp duty (ABSD).
Conclusion
The booming HDB resale market has yet to stop – but it is beginning to show signs of slowing down. If you are considering buying a resale flat soon or looking to sell your HDB to take advantage of the strong resale market, it pays to understand the factors at play.
We recommend getting advice on upgrading to a private home with a landed property agent in Singapore or selling your HDB home with the help of a HDB housing agent. In fact, Joel Choy is a wise choice if you are looking to liaise with a reliable property real estate agent with a solid track record. Contact him right now to book a free strategy consultation, where you can get advice on soaring mortgage prices and more!