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

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Huttons’ comments on URA and HDB 2Q 2021’s numbers

Private Homes

The pace of increase in private home prices at 0.8% in 2Q 2021 was more moderate compared to 1Q 2021’s 3.3%. For 1H 2021, private property prices have risen by 4.1%. Private property prices have appreciated by 7.1% since the circuit breaker in 2Q 2020, 19.7% from the bottom in 2Q 2017 and are now 5.8% above the previous peak in 3Q 2013.
After a strong run-up prices in 1Q 2021, some landed home owners raised their asking prices putting themselves out of reach for some buyers, resulting in a pullback in prices in 2Q 2021.
Demand for properties was strong in 2Q 2021 despite Phase 2 (Heightened Alert). Total transactions stood at 8,449 which is the highest since 4Q 2012. Desire for a safe haven during the pandemic and investing in properties to beat inflation are some reasons behind the demand for properties in 2Q 2021. Resale transactions accounted for 63.1% of the transactions as there were lesser new launches in 2Q 2021. 
2,966 new units were sold in 2Q 2021, slightly lesser than the 3,493 new units sold in 1Q 2021 because of lesser launches and the restrictions due to Phase 2 (Heightened Alert). Sales in the CCR was at an eleven-year high, aided by the robust sales at Irwell Hill Residences, One Bernam and Park Nova. 
In 1H 2021, sales of uncompleted homes reached 6,399 units, its highest half yearly sales since 2013. This has driven down the uncompleted unsold units to 19,384 units. This is 47.4% lower than the peak of 36,839 uncompleted unsold units in 1Q 2019.
The return to Phase 2 (Heightened Alert) is a temporary setback. Even if sales were to settle at an average of 700 to 900 units per month for 2H 2021, the total sales volume for 2021 is expected to be more than 10,000 and possibly 12,000 on the higher range of estimates. This will be the highest yearly sales since 2013. Prices are estimated to rise by as much as 8% for the whole year.
HDB resale prices rose by 3.0% in 2Q 2021, similar to in 1Q 2021. For 1H 2021, HDB resale prices have risen by 6%. HDB resale prices have appreciated by 11% from the circuit breaker in 2Q 2020, 11.9% from the bottom in 2Q 2019 and are now 2% below the previous peak in 2Q 2013.
The strong price gains reflect robust demand for flats as buyers shift their focus away from new flats which are experiencing delays in completion. It may also indicate that more buyers are asking for higher prices which may result in more instances of cash over valuation. For buyers of new flats who are still holding on despite the delays, some of them have turned to renting as an interim solution, thereby pushing up the subletting volume in 2Q 2021 by 2.8% to 10,979 units.
The lower transacted volume of 7,063 resale flats in 2Q 2021 is due to the restrictions in Phase 2 (Heightened Alert) where viewings are limited. Furthermore some sellers’ refusal to budge on their asking prices are slowing transactions.
With the return to Phase 2 (Heightened Alert) for one month till Aug 18, we may see similar conditions in 3Q 2021. Nevertheless HDB resale prices are likely to exceed their previous peak in 3Q 2021 as demand remain robust. There may be a boost to demand in the resale market as some buyers of BTO flats are likely to appeal to HDB for waiver of penalty for cancellation of their flat booking. In some instances, the delays are more than a year.
The HDB resale market may see volume between 27,000 and 29,000 units, the highest since 2010. Prices may rise up to 8% in 2021, the strongest growth since 2011.
The Aug 2021 BTO exercise offers more flats at prime locations.
The two BTO at Tampines are very close to Tampines West MRT and offers views of Bedok Reservoir.
The Kallang/Whampoa BTO is within minutes’ walk to Boon Keng MRT. 5-room DBSS flats have seen their values exceeded $1 million, a good indication of the demand for flats in this area.
Although the Queenstown BTO appears to be far from the Queenstown MRT station, the bus stop at its doorstep can bring residents to either Commonwealth or Queenstown MRT in less than 5 minutes. Some of the flats on higher floors may have unblocked views towards the Greater Southern Waterfront.