Resale prices of Housing and Development Board (HDB) flats have stopped increasing for the first time since June 2020, holding steady in February 2023 compared to the month before, according to flash figures released by SRX and 99.co on Thursday (Mar 9).
Notably, the prices of larger flats fell, with the resale prices of five-room flats and executive flats dropping 0.8 per cent and 0.3 per cent respectively.
Property analysts have attributed the decline to lower demand from private home buyers or downgraders who have been affected by the new 15-month waiting period requirements.
"The 15-month wait-out period likely helped to moderate the demand for larger resale flats, as those who have sold their private homes are kept out from buying them," said Wong Siew Ying, PropNex Realty's head of research and content.
In contrast, three-room flat prices grew 0.3 per cent and four-room flat prices held steady. Resale prices in both mature and non-mature estates dipped by 0.1 per cent.
Resale volumes, meanwhile, slid to their lowest levels since May 2020, after a temporary surge in January 2023. Around 1,849 units changed hands in February, 28.2 per cent lower than the month before and down 2.9 per cent from the previous year.
It remains to be seen if cooling measures and rising interest rates are the cause for the lower demand, as resale volume typically falls in February due to seasonal factors.
"There is a pause in the market activities, but it will resume shortly," said Nicholas Mak, ERA Realty's head of research and consultancy.
Buyers could also be taking their time to return to the market after January's Chinese New Year celebrations, said OrangeTee & Tie's senior vice-president of research and analytics Christine Sun.
Around 60.9 per cent of resale volumes were from flats located in non-mature estates, while 39.1 per cent came from mature estates. Four-room flats changed hands the most, accounting for 43 per cent of volumes, followed by three-room flats at 27.5 per cent, five-room flats at 22.8 per cent and executive flats at 6.6 per cent.
The number of million-dollar flat transactions in February fell 40 per cent from the month before, with 24 such deals taking place. This was the lowest monthly tally since April 2022, noted 99 Group head of research Pow Ying Khuan.
Toa Payoh recorded the most million-dollar HDB flat deals with five transactions, followed by Queenstown, which had four such deals.
The highest transacted price for a resale flat in the month was S$1.34 million for a five-room unit at The Pinnacle @ Duxton. In non-mature estates, the most expensive HDB flat transaction was S$1.08 million for an executive apartment at Woodlands Street 81.
"A tug of war has appeared in the HDB resale market after the government announced an increase in housinggrants on Feb 14," said Huttons Asia chief executive Mark Yip.
He noted that quite a number of sellers, especially those selling flats that have met their minimum occupation period, have increased their asking prices. Most buyers, however, are unwilling to pay higher cash over valuation as resale prices have become too expensive
Yip believes the HDB resale market may be quiet in the first quarter of 2023 as buyers and sellers try to find a middle ground.
PropNex's Wong expects HDB resale prices to remain relatively stable as many sellers are likely to hold on to their asking prices in view of the high cost of replacement homes.
With more grants being given to first-timers purchasing smaller flats, demand could also strengthen for three and four-room resale flats in coming months, said Sun.
"Demand may rise more significantly in the second half of this year when the penalty for non-selection of BTO (Build-To-Order) flats kicks in. Those who fail to select a flat or have their first-timer privileges suspended will likely opt for a resale flat," she said.
The Singapore government's commitment to keep up the supply of BTO flats may also draw more homebuyers away from the HDB resale market, Mak said.
Credit: The Business Times