Resale prices rise 3.2% to 155.4 in Q4 2021: HDB flash estimate

The Resale Price Index increased for the seventh consecutive quarter.

Resale prices in the fourth quarter rose for the seventh consecutive quarter, posting a 3.2% quarter-on-quarter increase to 155.4, according to the flash estimate by the Housing and Development Board (HDB). 

This is higher than the 2.9% QoQ increase recorded in the third quarter to 150.6.

Resale flat prices rose 12.5% for the whole year, According to the HDB. OrangeTee said this is the highest annual growth since 2010 when the prices increased by 14.1%.

According to OrangeTee, prices are increasing as “demand continues to outstrip supply in many areas.”

“On the demand side, the construction delays and long completion periods for new Build-to-Order (BTO) flats may have driven buyers to the resale market. Some private homeowners have also sold their condos amid the rising private home prices and downgraded to public housing, thus adding to the demand pool,” it said.

The government on 15 December announced the tightening of the loan-to-value limit 90% to 85% for housing loans from HDB to cool the private and public residential markets, effective 16 December.

OrangeTee noted that there could be a limited impact from the new cooling measures. It added that buyers “may generally be more prudent” in purchasing homes and may negotiate for better prices even if most buyers may not be “adversely affected by the reduced loan-to-value limit.

Prices are not expected to drop and will likely remain robust as construction may still be delayed for some new flats and the overall employment rate is still healthy, it said.

“Moreover, the overall employment rate is still healthy. Most sellers may not be in a hurry to sell their flats or face financial difficulty to drop prices excessively. As such, we anticipate that prices may continue to grow next year but at a slower pace of between 5 and 8 percent,” OrangeTee said.

Meanwhile, Huttons Asia said existing HDB owners were unable to move to their new BTO flat, executive condominium or private homes, delaying the sale of their current flat and limiting the availability of flats for sale.

“If the delays in the construction industry are not resolved, the planned ramp-up in BTO supply is not going to resolve the demand and supply imbalance in the HDB resale market,” it said. 

“At some point, price resistance will set in in the HDB resale market. On balance, HDB resale prices are expected to chalk up another year of strong growth up to 8% in 2022. Transaction volume may moderate to around 27,000 flats because of limited supply of flats for sale,” it added.

For 2022 and 2023, HDB said it plans to launch up to 23,000 flats annually and it is preparing up to 100,000 flats from 2021 to 2025, subject to prevailing demand.

The board is also set to offer 3,900 BTO flats in February in towns/estates such as Geylang, Kallang Whampoa, Tengah and Yishun. It will also offer around 5,200 to 5,700 BTO flats in Bukit Merah, Jurong West, Queenstown, Tampines, Toa Payoh and Yishun.

The numbers are still subject to review as more project details “will be firmed up” closer to the date of the launch.