PRICE GROWTH TO MODERATE: EXPERTS
However, the pace of growth in third-quarter HDB resale prices has also slowed compared to the second quarter, when prices rose 2.8 per cent.
This slower price growth indicates that the housing sector is starting to feel the effects of rising interest rates and inflation, said Ms Christine Sun, senior vice-resident of research and analytics at OrangeTee & Tie.
“Rising inflation will erode buyers’ affordability, especially middle- and lower-income Singaporeans, who form the bulk of purchasers. As more budget is used for necessities and daily expenditures, buyers may be less willing to pay more for their next home,” she said.
Ms Sun noted that Singapore’s HDB resale market will remain attractive in the long term, even with the cooling measures in place.
This boils down to factors such as a tight domestic labour market, strong household balance sheets and sustained income growth; all of which will continue to prop up housing demand.
“Past trends indicate that our property market is highly resilient and usually rebounds within six months of a cooling measure (announcement),” she said.
But industry experts are still expecting price growth to moderate in the coming quarter as the effects of the latest property curbs, such as a lower loan-to-value limit for HDB loans, kick in.
The costs of financing an HDB flat will also increase due to rising mortgage rates, said PropertyGuru’s Dr Tan.
Banks have already been making swift adjustments to their mortgage rates, with the three local lenders – DBS, OCBC and UOB – raising their fixed rate home loans to as high as 3.85 per cent earlier this month.
“As buyers and sellers recalibrate their expectations, it is expected that sales will slow in the immediate term,” said Dr Tan.
Huttons Asia’s senior director of research Lee Sze Teck agreed, noting that HDB resale prices are likely to moderate in the fourth quarter in the wake of the latest cooling measures.
“Private property owners will now need to sell off their private property and wait 15 months before they can buy a HDB resale flat. This effectively cuts off the demand from (these buyers),” he said.
That said, some demand may flow to the 4-room flats and inadvertently push up prices for this smaller flat type.
Under the new curbs, the 15-month wait-out period will not apply to those aged 55 and above, who will still be able to move from a private property to a four-room or smaller HDB resale flat.
Mr Lee noted that in the third quarter, 3-room and 4-room flats saw average price growth of 2 per cent and 1.7 per cent from the previous three months.
He also pointed to a recent sale of a 4-room flat at Pinnacle@Duxton for S$1.37 million, which marks the most expensive 4-room flat in Singapore to date.
Meanwhile, HDB resale volume should stay in the range of 6,500 and 7,000 in the fourth quarter, translating into a full year volume of around 28,000 units, said Mr Lee.
“The largest-ever BTO launch in November may draw some demand away from the resale market,” he added.
“Prices are likely to moderate further to 1 per cent to 2 per cent in the fourth quarter, giving rise to a full year price gain of not more than 10 per cent.”