The number of resale transactions for public housing flats rose 7.8 per cent to 20,813 cases last year from 19,306 cases in 2015. The latest figure is also the highest in four years.
One factor that boosted the resale volume of Housing & Development Board (HDB) flats last year is that more homebuyers sensed that prices in this segment had stabilised and may not fall significantly if they continued to wait. Also contributing to the pick-up in transactions could be that as more private and public housing projects are completed, some of the HDB upgraders who bought these new homes are compelled to sell their existing HDB flats in order to take possession and finance their new homes.
Property consultants predict that this year, buying demand for resale flats will come in at 20,000 to 23,000 units.
"Those with housing needs will continue to prop up the market as they cannot postpone their purchase indefinitely," said ERA Realty Network key executive officer Eugene Lim.
Current price points will entice more buyers to enter the market as they are attractive enough for young couples and upgraders. HDB resale flat prices are currently in consolidation phase, with marginal price movements.
On Thursday, HDB said that its resale flat price index dipped 0.1 per cent in the fourth quarter of 2016 over the preceding quarter. The drop for the whole of last year was also 0.1 per cent.
Mr Lim of ERA argued that despite the slowing economy, HDB resale prices have not been affected as much as private residential properties. "A major reason is the difference in characteristics between HDB resale buyers and private residential property buyers. As a no-frills housing form, HDB flats satisfy a housing need, whereas private condominiums are more of a housing want, with their higher prices and more luxurious facilities. Hence, HDB prices tend to be less correlated to Singapore's economic performance."
Also contributing to the stability of the HDB resale market is HDB's decision to publish daily transaction details online, available for public access. "As this initiative by HDB has been ongoing for some time, we have seen more widespread usage of this information. Negotiations are usually centred on recently transacted prices, and ultimately, the deal will be concluded at a price which does not differ too much from past prices. This is because the buyer wants to ensure that the purchase price can be supported by valuation."
ERA forecasts a +0.5 per cent to -0.5 per cent change in HDB's resale price index this year.
HDB also said that the number of applications approved for subletting of flats fell one per cent to 10,678 cases in the fourth quarter of last year from 10,789 cases in Q3 2016. As at the end of last year, 52,941 HDB flats were sublet, an increase of one per cent over Q3 2016.
ERA expects rental transactions to increase from last year's 44,530 to around 45,000 to 46,000 this year.
"HDB flats are still attractive to tenants who prioritise location over product, as HDB flats offer better value for a prime location. Shorter leases are still commonplace, with most tenants opting for a 12-month lease as they bet on further rental decreases. Hence the HDB rental market in 2017 will see a large portion of tenants renewing their leases. This will be a major contributor to leasing volume in 2017," said Mr Lim.
Moreover, as rents of private apartments and condominiums fall further, HDB rents will also ease correspondingly to remain attractive to prospective tenants, he added.
This year, HDB will offer about 17,000 new flats for sale in Build-To-Order (BTO) exercises. For the first BTO exercise to be launched next month, about 4,100 flats in Clementi, Punggol, Tampines and Woodlands will be offered. More information on these BTO flats are available on the HDB InfoWEB.
Adapted from: The Business Times, 27 January 2017