Price Correction During Avoided Key Outbreak by HDB Resale Market

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New Residential Property Sales Surged 75% in May in the Charts

Regardless of the COVID-19 pandemic as well as the uncertain global economic outlook, Singapore’s HDB resale marketplace averted a significant price correction, together with costs staying surprisingly steady in the previous two quarters, shown OrangeTee & Tie.

HDB public housing statistics for Q2 2020 revealed that HDB resale flat costs marginally improved by 0.3% quarter-on-quarter, following holding apartment in the past quarter.

OrangeTee considers the four rounds of competitive stimulation bundles by the authorities has been successful in preventing a home market collapse or property price meltdown.

“Currently, costs of apartments appeared to be holding company with no clear anxiety selling island-wide,” said Christine Sun, Head of Research & Consultancy in OrangeTee & Tie.

She noticed that the many financial aid measures like permitting qualified homeowners to defer loan payments, might have helped stop”a possible wave of loan defaulters out of selling their houses in hurry or offloading their houses at excessively low costs during fiscal difficulties”.

In addition, the government’s strict regulatory measures like Mortgage Servicing Ratio (MSR), which restricts mortgage loans of taxpayers, also have efficiently instilled financial prudence one of buyers.

“Now most Singaporeans appear to be able to support their home loans despite the present financial challenges,” said Sun.

However, while costs remained steady, the amount of resale trades dropped by over 41.9% to 3,426 units throughout Q2 2020.

OrangeTee attributed the sales decline into the more secure distancing measures imposed by the authorities during the pandemic as well as the circuit breaker interval.

“A two-month circuit breaker interval has been executed in April and May through which home viewings were barred while societal interactions and moves were significantly reduced to stop the spread of the coronavirus locally. The HDB office has been closed and a few trades couldn’t be finished,” said Sun.

Back in April, the amount of resale transactions dropped to 424 units, while May published a historic monthly low of 363 units, revealed HDB info from data.gov.sg.

The HDB resale market return back to life once the government raised the circuit breaker steps in early June.

Meanwhile, most adult estates saw HDB resale trades drop in Q2 2020. Actually, the complete number of trades in those estates diminished by 40.4% quarter-on-quarter into 1,329 units in Q2 2020.

Tampines emerged as the very popular estate, using 217 units sold throughout the time under review, followed closely by Bedok and Ang Mo Kio with 180 and 161 units sold, respectively.

Sales volume in non-mature lien dropped by a larger size when compared to adult estates, at 41.4% to 1,909 units .

Regardless of the fall in earnings, over 200 units were changed across several property in Q2 2020, such as Yishun which found 283 units marketed, Sengkang using 260 units and Woodlands using 223 units.

Looking forward, OrangeTee anticipates requirement for HDB resale level to return to a normalcy within the coming months since home viewings have completely resumed.

Nevertheless, it anticipates complete resale trade to this season to be lower compared to preceding year at approximately 18,000 to 20,000 units.

“At this juncture, a substantial price correction is quite distant unless the pandemic deteriorates fast and our unemployment rate climbs considerably,” said Sun.

“Yet, a source overhang which has many HDB apartments reaching their five-year Minimum Occupation Period will continue to apply some downward pressure on costs. The general resale cost could vary between -2 and 1 percent annually,” she added.