Pent-up demand boosts Singapore's HDB resale market with 2,435 flats resold in August

Data released by the SRX showed that the HDB Resale market continued to gain ground with brisk sales and firmer prices in August.

In its flash report, SRX noted that an estimated 2,435 HDB flats were resold in August. Wong Siew Ying, Head of Research and Content, PropNex, said even though this is 1.4% below July’s transactions, it is still a very strong monthly sales, boosted by the pent-up demand that is still coming into the market following the restrictions during the circuit breaker and phase 1 period. Meanwhile, HDB upgraders who have bought a private property would also look for an opportunity to sell their flats after the 10-week lockdown in April-June.

With more buyers entering the market, competition for choice resale flats would be stiffer. Anecdotally, Wong says some buyers may be prepared to pay a slightly higher price for their preferred unit and this could explain the marginal 0.7% month-on-month increase in HDB Resale prices in August, as tracked by the SRX.

"In our view, HDB Resale prices likely bottomed in Q2 2020 and would remain fairly flat for the rest of the year, with marginal upside potential of 1% to 2% increase for the full-year 2020. Factors that would help to keep HDB Resale prices stable include: 1) the Mortgage Servicing Ratio of 30%; 2) buyers of resale flats are mostly owner occupiers; 3) limited speculative activity; and 4) healthy underlying demand for resale flats," he adds.

"HDB flats cater to the housing needs of many Singaporeans and we expect demand for them to remain healthy and transaction volumes that we have witnessed in recent months to be sustainable. Additionally, the prices of HDB resale flats have also been generally stable in recent years, making them affordable to households. First-time buyers, in particular, may receive up to $160,000 in housing grants to help fund the purchase. Furthermore, buyers who have more pressing housing needs would also be more inclined towards purchasing a resale flat given the expected delays for the completion of some Build-To-Order (BTO) flats.”