OrangeTee Real Estate Data Trend Q1 2019

Demand remained resilient as the number of HDB resale transactions for the first quarter reached a seven-year high with 4,835 flats sold in Q1 2019 (Chart 1).

Compared with the same period last year, the number of transactions rose 8.5 per cent. However, on a quarterly basis, resales declined 14.2 per cent (Table 1).

The quarter-on-quarter (q-o-q) decline is within expectation as the number of resale applications is usually lowest in the first quarter of the year due to slower marketing activities immediately after the year-end holidays and during the Chinese New Year period.

Chart 1 HDB resale volume for the first quarter reached a seven-year high since 2012. Credits: OrangeTee & Tie Research & Consultancy

Demand for older flats had defied prevailing headwinds as a record number of flats ≥ 40-year old were inked last year. The market share of older flats has also been increasing, which now constitutes 13.9 per cent of total resale transactions for Q1.

A five-room BTO HDB flat has been sold for a record S$1.2 million in April this year. This is the first time that the price of a standard HDB flat has surpassed the priciest non-standard flats (e.g. DBSS units, Maisonettes, Terraces or flats at Pinnacle@ Duxton) ever sold.

We anticipate that HDB resale volume may rise in tandem with more flats reaching their five-year Minimum Occupation Period (MOP) this year. With the increasing supply of completed flats, prices may flatline or fall marginally by 1 to 2 per cent this year.

Trending – Older flats are still in demand

Demand for older flats ≥ 40-year old has defied prevailing headwinds as a record 2,537 flats were transacted last year (Chart 2). This is despite lingering concerns about the depreciating value of older flats and some adverse impact from the latest cooling measures.

Demand for older flats has been rising over the years. In 2018, older flats sold in the second, third and fourth quarters were all at their highest levels for the respective quarters (Chart 2). In Q1 2019, 628 older flats were sold, which was also the highest first quarterly sales on record.

Sales of older flats can be observed across many towns (Table 2), indicating that older flats are generally quite well-received island-wide. The market share of older flats has also been rising.

Sales of older flats as a percentage of total resale transactions increased from 1.9 per cent in Q1 2009 to 13.9 per cent in Q1 2019. This is also the highest percentage ever recorded.

Trending – Standard flat sold at a record price

HDB BTO at 9A Boon Tiong Road / OrangeTee & Tie Research & Consultancy Photo

Based on data.gov.sg and HDB website, a standard five-room HDB flat at Boon Tiong Road has been sold for S$1.2 million in April this year, smashing the previous records set by a 237 sqm HDB Terrace at Jalan Bahagia sold in September last year and a five-room DBSS at Boon Keng Road in January this year, both of which were transacted at S$1.185 million. The 112 sqm five-room HDB flat is between 34 and 36 storeys with 95-year lease remaining.

This is the first time that the price of a standard HDB flat has surpassed the priciest non-standard flats (e.g. DBSS units, Maisonettes, Terraces or flats at Pinnacle@Duxton) ever sold (Chart 3).

Although only 26 standard flats have been sold for ≥ $1 million as of April 2019, the numbers have been inching up steadily through the years. We may expect more of such transactions to be linked as many new flats in mature estates like Bukit Merah and Queenstown will be reaching MOP in the coming months.

Schemes like the Home Improvement Programme (HIP II), Voluntary Early Redevelopment Scheme (VERS) and policy tweaks to allow buyers to use more Central Provident Funds to purchase older flats may instil market confidence and bring greater price stability for older flats. – Christine Sun, Head of Research & Consultancy

For the full report, please click here.

This article is contributed by OrangeTee & Tie.

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