The third quarter seemed to signal quite a few changes in the real estate market. Small tweaks and signs set aside different segments within the same sector. And these signs could also point to what’s ahead.
Resale HDB flat transactions lower in Q3
For the past 4 years, prices of resale HDB flat gradually fell from its peak in 2013, albeit very slightly. When flat prices fell, transaction volume made up for the difference. In the last quarter, however, fewer units changed hands despite the lower prices. Competition have come new build-to-order (BTO) flats, executive condominiums (ECs) and an expanding pool of more price-palatable private properties.
Resale flat transactions fell 3.2% last quarter. 5,808 units were sold in comparison to the 6,001 in Q2. The only other time the number of units sold crossed the 6,000-unit mark was in Q3 of 2012 when 6,560 resale flats were sold. That said, last quarter’s sales volume was 5.3% higher than the same quarter last year.
Prices falling since 2013
Q3’s resale HDB flat prices were the lowest since Q1 of 2015 though prices have been falling since 2013 when the effect of cooling measures finally took.
Property analysts attribute much of the falling prices and sales volume to the decreasing interest in older HDB flats, especially after the authorities announced that not all older flats automatically qualify for the Selective En Bloc Redevelopment Scheme. Older HDB flats refer to those with less than 60 years left in their lease. Many more owners of such flats have since come into the market, in fear that prices will fall further.
The Housing Development Board (HDB) has increased the resale grants considerably in March this year. They have also offered cheaper flats which are ready in a shorter period of time.
And with the number of collective sales done this year, many displaced residents may be looking for “replacement units” or a place to rent until their new homes are ready. Thus, while last quarter’s numbers were a little lacklustre, analysts do not expect the decline to last.