Demand for resale HDB flats expected to continue

Resale HDB flat prices have risen for the first time in a year, albeit at a slight increase of 0.1%.

First, the increase in resale flat prices in a year

four storey HDB building near McDonald's in potong pasir avenue 2

The four-storey HDB located in Block 148 Potong Pasir Avenue 2. Picture: iProperty

For the past 4 quarters, resale HDB flat prices have been on the decline. Last quarter, the resale price index finally rose to 130.9, from the previous 130.8. With the added help from the government who has implemented new policies last month, overall sentiments about the public housing market may be improving.

These new changes include the use of a larger percentage of monies from the Central Provident Funds (CPF) for purchases of HDB flats as well as enhanced housing grants for first-time buyers. One of the most significant changes is perhaps the raise in income ceilings for eligible buyers. Market sentiments are positive for the moment, despite the uncertainty in both global and national political and economic growth.

See more: Income ceilings raised to help first-time HDB flat buyers

Demand for resale HDB flats expected to rise

While a sharp spike in demand for resale flats is not expected, analysts are expecting continued demand for resale flats even as the government release more new flats. Next month, 4,500 Build-to-order (BTO) flats will be released in Ang Mo Kio, Tampines and Tengah. 3,000 more will be released in Sembawang next February. With more applicants eligible for new units, will the resale HDB flat market see less activity or will the positive sentiments continue to carry over to this market segment?

In addition, more flats are reaching the end of their 5-year minimum occupation period (MOP) soon and more units will soon enter the market, possibly pressure on prices. There are however expectations of positive growth in the resale HDB segment. Though prices are expected to remain flat this year, come 2020, transaction volume may increase and accordingly, also prices.

See more: ECs that will achieve Minimum Occupation Period (MOP) in 2019