Despite the on-going COVID-19 pandemic, the Singapore public housing market is still proving resilient. According to flash estimates released by the Housing and Development Board (HDB) on 4th January, resale prices of HDB flats climbed 4.8% in 2020, up from the 0.1% increase recorded in 2019.
According to the flash estimates, prices in Q4 2020 rose 2.9% over Q3 2020. It is the third consecutive quarter of price increase and the biggest quarterly increase since 2011 when HDB resale prices climbed 3.8% that quarter. Q4 2020 also saw the highest year-on-year increase in HDB resale prices since the Q3 2013, which recorded a 6.5% increase. The finalised data along with more detailed public housing data, is expected to be released by the HDB on January 22.
According to industry experts, the HDB resale market recovery could be due to the slew of policy changes made over the past two years to make public housing more affordable and enhance the attractiveness of older flats.
Amongst the policy changes were allowing buyers greater flexibility in using their Central Provident Fund (CPF) to buy older flats and the introduction of the Enhanced CPF Housing Grant (EHG). The EHG allows eligible first-time applicants for resale flats to enjoy subsidies of up to $80,000. This is in addition to the CPF Housing Grant (up to $50,000) and Proximity Housing Grant (up to $30,000). This means that first-time resale homebuyers can enjoy up to $160,000 in housing grants.
More newer HDB flat for resale
Another contributing factor is the number of newer HDB resale flats being sold in the last quarter. These flats are in highly desirable locations like Duxton, Toa Payoh and Ang Mo Kio and were transacted at prices above $1 million dollars.
In just the first 11 months of 2020, a record 72 HDB resale flats were sold at prices of over $1 million. This is higher that the 71 units transacted in 2018 and 64 units in 2019. The highest transacted price was $1.258 million for a HDB resale flat at Pinnacle @ Duxton in September 2020. These transactions could have caused the increase in the overall price index.
Other contributing factors could be the long waiting period of Build-to-Order (BTO) launches and the ever-rising private home prices that could steer attention towards the HDB resale market. This is evident in the number of HDB resale transactions recorded in Q3 2020, which hit 7,787, which was more than double the 3,426 transactions recorded in Q2 2020.
With the current pandemic causing uncertainty, those who are badly affected may be looking to downgrade from private housing to HDB flats whereas those working in sectors not affected by the pandemic could be looking to upgrade into bigger and newer resale flats in central locations.
With the arrival of the COVID-19 vaccines and the expected recovery in the economy, many real estate industry experts are expecting the prices of HDB resale flats to rise further by 2% to 5% in 2021.
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