Huttons' comments on URA and HDB 2Q 2021's flash estimates | Huttons Group

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Huttons’ comments on URA and HDB 2Q 2021’s flash estimates

The URA private residential price index increased at a more measured pace of 0.9% compared to 1Q 2021’s 3.3%. For 1H 2021, private property prices have risen by 4.3%. Private property prices have appreciated by 7.3% since the circuit breaker in 2Q 2020, 19.8% from the bottom in 2Q 2017 and are now 5.9% above the previous peak in 3Q 2013.

Source: URA, Huttons Research

Prices in 2Q 2021 have increased by a more measured pace because of lower volume due to Phase 2 (Heightened Alert). The restrictions on group sizes for viewings impacted the sales volume. Resale volume has made up a bigger chunk of the transactions in 2Q 2021 at 61.1% compared to 57% in 1Q 2021. Some buyers are turning to the resale market because of delays in the construction industry caused by tight labour supply.

After a strong run-up prices in 1Q 2021, some landed home owners raised their asking prices putting themselves out of reach of some buyers, resulting in a pullback and slower price gains in 2Q 2021.

We expect private property prices to increase up to 8% in 2021. The trend of price growth in the property market while in line with global trends remains a concern as it is likely to exceed the GDP forecast and income growth for 2021.

MAS’s managing director, Mr Ravi Menon’s comments about the property market not in an overheated state may calm the market’s nerves about cooling measures. But his next statement about not giving advance notice of cooling measures means the Government will want an element of surprise should they decide to cool the market. In our view, taken as a whole, it means that cooling measures remain a possibility. Cooling measures are likely to be targeted at certain group of buyers such as multiple home owners with higher ABSD or lower LTV or couples who decouple to buy multiple homes to encourage prudence.

In fact, the stable and resilient property market are the key reasons why investors, both foreign and local are putting their money into properties and that may spark more buying among those with ample liquidity.


Preliminary estimates put the increase in HDB prices at 2.8% which is lower than the previous quarter increase of 3%. For 1H 2021, HDB resale prices have risen by 5.9%. HDB resale prices have appreciated by 10.8% from the circuit breaker in 2Q 2020, 11.8% from the bottom in 2Q 2019 and are now 2.1% below the previous peak in 2Q 2013. The slower price increase could be due to low volume and resistance towards paying more in cash over valuation among buyers.

Source: HDB, Huttons Research

Based on transactions downloaded as at 30 Jun 2021, HDB resale prices have rose for 22 out of 26 towns with flats in Central Area, Serangoon and Woodlands seeing the biggest increase. The Central Area saw a 10.8% increase (53 units sold), Serangoon 9.6% (112 units sold) and Woodlands 8.5% (393 units sold).

Transaction volume in 2Q 2021 is estimated to be 8% lower than 1Q 2021. Almost all 26 town saw lower transacted volume in 2Q 2021 except for Bukit Merah, Choa Chu Kang and Marine Parade. The lower volume is due to the restrictions imposed on viewings during Phase 2 (Heightened Alert). Generally there remain keen interest in the market for resale flats because of delays in completion of new homes.

In 1H 2021, there were a total of 106 HDB flats that were sold for $1 million and more. In comparison, there were only 82 such transactions in 2020 and 64 in 2019. The most expensive flat sold in 2Q 2021 was a 49-year-old terraced flat in Whampoa.

If conditions continued to be buoyant, the previous peak in prices will be breach in 3Q 2021. We expect HDB resale prices to increase by 8% to 10% in 2021, surpassing the gains of 5% in 2020. The number of million-dollar flat transactions could possibly exceed 200 in 2021. While it may make headlines for the transacted value, such transactions are less than 1% of the whole year transaction volume.

The upcoming BTO launches are well-located and offers a very good mix in both mature and non-mature estates. The estimated construction period is unlikely to go back to pre-pandemic level and that may put some potential buyers off.