SINGAPORE, Sept 3 — In August, five Housing and Development Board (HDB) resale flats transacted for at least $1 million, as prices across the housing segment continued inching higher despite the Covid-19 battered economy, a report released today said.

Property experts responding to the Singapore Real Estate Exchange (SRX) flash report told TODAY the HDB resale market was showing signs of strong resilience, with prices expected to rise 1 or 2 per cent for the full year in 2020.

"I think this will bring a lot of cheer to the HDB owners, because the public housing has been in a negative state for a very long time for the last six to seven years,” said Ismail Gafoor, chief executive officer of Propnex property consultancy.

"At the end of the day, people still need a roof over their head despite the economic downturn. Honestly, resale flats are affordable especially if people take advantage of the grant,” he said, referring to the Enhanced CPF Housing Grant which was announced last year to aid first-time home buyers.

The SRX report said the average price of resale HDB flats across Singapore rose 0.7 per cent in August, after rising 0.4 per cent in July. Prices were 2.1 per cent higher than in August 2019.

The report said August saw 2,435 HDB resale transactions, which was a 1.4 per cent decrease from July. However, the sales volume for these properties was a hefty 23.5 per cent higher than August last year when 1,971 units were sold.

The SRX also reported that the overall median transaction over X-value (TOX) was positive by S$3,000 in August, an increase of $2,000 from July. The median TOX measures whether people are overpaying or underpaying the SRX estimated market value.

Forecast for HDB resale flats

Christine Sun, property agency Orange Tee’s head of research and consultancy said one reason for the increase in resale transactions in August compared with a year earlier could be demand being diverted from the Build-To-Order (BTO) market.

She noted that August’s BTO launch was "heavily oversubscribed”, adding that this is a trend that is likely to continue in the upcoming months.

"Unsuccessful candidates may have turned to the resale market to meet their housing needs.

"Moreover, many BTO flats that were sold in August will be completed many years later, with some between 2025 and 2027. Those who do not wish to wait too long for the flats to be completed, will likely opt for HDB resale flats as an alternative,” she said.

Ismail agreed that the delay of BTO flats could mean that newly married couples are considering resale flats as their matrimonial home.

"In our opinion, we think the HDB market is showing strong resiliency. And we are also expecting for the prices to go up by 1 to 2 per cent for the whole year of 2020 because the demand has been relatively positive,” he added.

He also predicts that there could be about 22,000 resale flats transacted this year, "just about 5 per cent lower than last year”.

Sun also pointed out that the pandemic and economic uncertainties did not seem to have put a dent in HDB resale prices, given the across-the-board increases.

Chris Koh, director of property consultancy Chris International said that he is certain that HDB resale transactions will remain steady during uncertain economic times as HDB flats are more affordable and most buyers are buying for stay and not for investment.

S$1 million HDB units in central areas

While public housing in Singapore is sought-after for its affordability, some units can come with a hefty price tag.

In August, the highest transacted price for a resale flat in the month was S$1,185,000 for a 5-room unit at The Pinnacle@Duxton, one of five resale flats that sold for more than $1 million during August.

Ong Kah Seng, who has been a property analyst for 16 years, said that this trend will continue in central locations and specifically in the "well conceptualised lifestyle driven public housing project”, The Pinnacle@Duxton.

According to SRX, nine million-dollar units were sold in July, the highest number so far this year, with eight sold in June. A total of 39 units have been sold for seven-figure prices so far this year. In 2019, 64 million-dollar units were sold, down from 72 sold the previous year.

"The profile of buyers willing to buy these units is generally unique, and they are usually buyers who are at the highest wealth bracket among all public housing buyers.

"They usually favour The Pinnacle@Duxton or centrally located flats as it offers them a golden opportunity to live in among the prime, prestigious areas in Singapore at the ideal price point of S$1 million for a property,” said Ong.

He added that having a S$1 million or so budget also enables these buyers to purchase a suburban condo, but these private properties could face weaker longer term pricing upsides given the far flung locality and fairly mixed resident profile in the heartlands.

Ismail agreed that S$1 million HDB units are extremely "location-centric”, giving the examples of Bishan, Commonwealth and Mei Ling Street as popular choices. He said that buyers are also not necessarily cash strapped nor are they newly married couples.

"These units have their own unique appeal,” he said.

"They are in good locations, near the MRT, most of them on a high floor with an unblocked panoramic view and have been fully renovated. So that being the case, I think we will continue to witness more million dollar flats moving forward as it has value proposition in comparison to the increasing prices of the private properties,” he said.

Ismail expects that around 70 million-dollar HDB units will be sold this year.

Sun pointed out that there has been an increase in the number of S$800,000 to S$900,000 units being sold, suggesting that the oversupply of units in the market at the moment could bring down the price of S$1 million units. — TODAY