HDB Resale Prices Hit 8-Year High in 2020

The HDB resale market ended 2020 on a high despite the Covid-19 pandemic. HDB flat prices edged up across the island as buyer demand stayed robust.

Based on data announced by HDB yesterday, resale prices climbed 3.1% in the last three months of 2020 over the previous quarter, marking the 3rd continuous quarter of growth. It is also the largest quarterly rise since the July to September period of 2011, when prices went up 3.8%.

On an annual basis, prices went up by 5% over the whole of 2020, which is the sharpest rise since the 6.5% chalked up in 2012. By comparison, resale flat prices had nudged up a mere 0.1% in 2019.

It wasn’t only the prices that rose. In terms of transaction volume, 2020 also marked an 8-year high, going up 4.4% to 24,748 resale HDB flats sold, from the 23,714 units that changed hands in 2019.

This is just a tad shy of the 25,094 resale transactions in 2012, that is the highest on record.


Confidence Of Buyers

OrangeTee & Tie’s senior vice-president of research and analytics, Ms Christine Sun, commented that the price increases last year were rather surprising in view of the rising supply of new HDB flats, against the backdrop of the Covid-19 induced economic downturn.

But she noted that the raft of stimulus measures by the government, like the Jobs Support Scheme, could have helped to buttress demand.

As she observed, “Most workers were able to keep their earnings with the help of various schemes. Some buyers were confident that they have the ability to service their housing loans, and proceeded with their new home purchases.”

Ms Sun further added that Singapore is now “reaping a harvest of market stability”, from the slew of measures put in place over the last few years, such as the mortgage servicing ratio, the total debt servicing ratio, and seller’s stamp duty that acted as a sort of bright line test.

However despite the steady increase in prices, she thinks the HDB resale market is in no danger of a housing bubble yet.

According to Ms Sun, “Typical signs of an asset bubble include the decoupling of prices from housing income, and excessive speculative buying activities… Many measures have already been put in place to prevent some of these scenarios from occurring.”

In addition, HDB resale prices are still 7.6% below the top achieved in the 2nd quarter of 2013. It had taken 17 consecutive quarters of increases from the 2nd quarter of 2009 to achieve that peak.

Source: The Straits Times . 23 January 2021