Singapore HDB prices up 2.4% in Q1

This is the lowest price growth since 2020.

Public housing data reveal that HDB prices in Singapore increased by 2.4 per cent in the first quarter of this year, albeit at a slower pace when compared to the 3.4 per cent quarter on quarter increase in Q4 2021. 

According to OrangeTee, this is the lowest price growth since Q3 2020 when prices rose 1.5 per cent. On a year-on-year basis, prices rose by 12.2 per cent. 

Last quarter’s slower price growth was not unexpected. As prices have already risen for eight consecutive quarters, some price resistance could be setting in.

Here’s more from OrangeTee:

With inflation rising faster than anticipated, the Federal Reserve made its first interest rate increase in more than three years. The US Fed plans 6 more hikes this year. 

As Singapore’s domestic interest rates are highly influenced by global market movements, especially by the US, mortgage rates here are tipped to rise by around 3 times this year. The impact of the interest rate hikes is dependent on various factors like the loan quantum and the investment portfolio of a buyer.

The majority of flat owners may not be adversely affected by the rate hikes given that safeguards are already put in place. All borrowers are subjected to the mortgage servicing ratio (MSR) and total debt servicing ratio (TDSR) which limits the amount of money that can be borrowed based on one’s income. 

Although more buyers are taking loans from private institutions in recent years, the loan quantum for most flats is not large. Buyers who have taken the HDB housing loans may be least affected by the interest rate hikes since the concessionary housing loan interest rate remains stable, pegged at 0.1 per cent above the CPF Ordinary Account interest rate.

Sales volume

Sales momentum slipped last quarter based on figures released by HDB. 6,934 resale flats were transacted last quarter, dipping 12.7 per cent from the 7,940 units sold in Q4 2021. This is the first time in nearly two years when sales volume dipped below 7,000 units. The previous low was in Q2 2020 when sales fell by 41.9 per cent to 3,426 units during the Circuit Breaker period in Q2 2020. 

The drop in Q1 2022 can be observed across most flat types with 4 room, 5 room, and executive flats falling the most by 11.7 per cent, 17 per cent, and 19.7 per cent respectively when compared to the preceding quarter.