HDB resale prices could slow to 6-8 per cent growth in 2023
HDB resale prices are likely to rise at a slower pace in 2023 following two years of blistering growth, with demand and a tighter supply of resale stock offset by the latest property curbs and an expected boost in Build-to-Order (BTO) new flat supply.
While most analysts say HDB resale prices could gain between 9 per cent and 10 per cent in 2022, down from the 12.7 per cent growth in 2021, PropNex Realty head of research and content Wong Siew Ying sees price growth in 2023 slowing even further to between 6 per cent and 8 per cent due to the cooling measures and some price resistance setting in.
“The new 3 per cent interest rate floor and lowered Loan-to-Value (LTV) limit (80 per cent) for HDB housing loans will affect loan quantum, and in turn, buyers’ purchasing power. The new 15-month wait-out period for condo downgraders (typically those with the means to pay higher prices) will also take them out of the HDB resale market,” Ms Wong said.
The housing affordability issue that was aired in Parliament on several occasions this year is likely to continue to hog the spotlight in 2023 after the Progress Singapore Party agreed to take up Senior Minister of State for National Development Sim Ann’s offer to debate the issue of HDB pricing policies in Parliament.
Still, PropNex does not anticipate a price correction in 2023, as resale demand remains resilient. “Those who don’t want to wait three to five years to get a BTO flat will continue to tap the resale market,” said Ms Wong.
Eligible first-time buyers of resale flats can also receive up to $160,000 in housing grants from the government, making HDB resale units attractive. “We project that some 27,000 to 28,000 resale flats may be transacted in 2023,” Ms Wong added.
Also buoying resale prices are resilient household balance sheets, a tight labour market and wage growth despite higher living costs and rising mortgage rates, OrangeTee and Tie’s senior vice-president of research and analytics Christine Sun pointed out.
With fewer HDB flats expected to exit their five-year minimum occupation period (MOP) in 2023 – 15,748 units compared with 31,325 units in 2022 – resale flat stock could remain tight, which will help keep prices stable.
But with more than 18,200 private condo units due for completion in 2023, HDB upgraders who are taking possession of those are likely to offload their flats first to avoid paying the additional buyer’s stamp duty (ABSD), adding to resale flat stock, ERA Realty’s head of research and consultancy Nicholas Mak said.
In addition to 23,184 BTO flats launched across four BTO exercises in 2022, another 23,000-plus BTO flats are expected to be launched in 2023, PropNex noted. These include about 4,400 to be offered in February 2023 in estates such as Jurong West, Tengah, Kallang Whampoa and Queenstown. In May 2023, HDB will offer between 3,800 and 4,800 flats.
Rentals in the HDB leasing market have jumped on strong demand for short-term housing amid the tight private and public housing markets, said Ms Chia Siew Chuin, head of residential research at JLL Singapore.
More rental growth could be seen in 2023, as landlords try to pass on higher property taxes and borrowing costs to tenants. The landlords’ market is also supported by demand from HDB upgraders as well as those affected by the 15-month wait-out period, Ms Chia said.
The HDB rental market may experience a supply crunch in the next few years, as the number of MOP flats drops and more tenants sign longer leases, Ms Sun said. Fewer flat owners may put up their units for lease, as the latest property curbs curtail their financial means to afford private property.
“Some HDB upgraders may take longer to find buyers due to the tighter borrowing limits. With interest rate hikes and private home prices not expected to drop anytime soon, fewer upgraders may buy a private property for owner-occupation and lease their flats for rental income,” said Ms Sun.
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