Depreciation for resales of old and new HDB flats slowed down in Q3: report

The high volume of resales weakened prices for flats aged 10 years old and younger.

HDB flats aged below 10 years and over 40 years old recorded slower depreciation in prices in Q3 compared to the previous year, dipping 2.5% QoQ to $481,427 and 0.9% to $340,188 respectively, OrangeTee & Tie Research & Consultancy reported. Prices for these flats declined 4.8% and 3.4% respectively in Q3 2018.

The price weakness in younger flats were attributed to a rise in resale transactions. According to government data, the number of younger flats sold in Q3 2019 rose 12.4% to 1,247 units in Q3, the highest transacted in a single quarter since Q3 2010.

More flats were also sold in non-matured estates, from 51.5% in 2015 to 81.9% in 9M 2019.

“The data may indicate that more families could be ‘cashing out’ on their flats earlier to upgrade to private property or a bigger HDB flat. Some owners may have sold their flats early for fear that the value of their flats would fall with age,” OrangeTee wrote.

The number of younger flat transactions is expected to grow in the upcoming months, as more flats reach their minimum occupation period.

In contrast, flats aged 10-20 years old saw the biggest rise in price during the quarter at 1.9% QoQ to $474,501, followed by flats 20-30 years old at 1.2% to $466,144. Both accelerated in growth from 1.3% and 0.6% respectively in Q3 2018. Prices of flats 30-40 years old climbed 0.5% to $401,098.

Based on government data, prices of HDB flat resales edged up 0.1% MoM in Q3. Transaction volumes dipped 0.2% to 6,264 units over the same period.

Flats in Ang Mo Kio that are 20-30 years old jumped 43.0% QoQ last quarter whilst 10-20 year old flats in Jurong East rose 21.6% over the same period. At Bishan, the price of flats over 40 years old surged 50.2%.

“Against a backdrop of growing economic uncertainties, the recent policy changes could be the positive catalysts behind the price growth of many HDB resale flats. The changes had likely spurred demand and instilled greater market confidence,” OrangeTee wrote.