Huttons’ comments on URA and HDB 2Q 2022 flash estimates

Growth in property prices in 2Q 2022 accelerated to 3.2% since the cooling measures in Dec 2021. It was almost 5 times that of 1Q 2022’s 0.7%. Price increases were observed across all market segments. In 1H 2022, property prices were up by 3.9%.

In 2Q 2022, it was business as usual as developers resumed the launch of major projects.

Developers are estimated to have launched between 1,300 and 1,500 units for sale in 2Q 2022. This is more than double the 613 units launched for sale in 1Q 2022. Sales in 2Q 2022 are estimated to be in the range of 2,500 to 2,700 units, higher than the 1,825 units sold in 1Q 2022.

Piccadilly Grand and LIV @ MB sold more than 70% of their units on launch day. Units at Piccadilly Grand were sold at a median price of $2,175 psf while those at LIV @ MB were sold at a median price of $2,405 psf. That pushed prices up by 6% in 2Q 2022.

Together with the opening of borders which has witnessed the return of foreign buyers, the demand has supported firming of prices in the Core Central Region (CCR). The CCR which tends to see more foreign buyers saw prices firming by 1.6% in 2Q 2022.

Purchases by foreigners in 2Q 2022 are estimated to have doubled from 1Q 2022. The top 5 projects which saw purchases by foreigners in 2Q 2022 are CanningHill Piers, Riviere, The Avenir, Irwell Hill Residences and Haus on Handy. There will be more purchases by foreigners in the months ahead.

In 3Q 2022, the market will see the launch of more projects – AMO Residence, K Suites, Kovan Jewel, Lentor Modern, Sceneca Residence, Sky Eden @ Bedok and The Arden. These projects will plug the gap in supply in the Outside Central Region (OCR). Further price increases are expected in the OCR in 3Q 2022.

Huttons’ previous forecast was up to 3% in 2022. We are revising the full year price growth to up 8%.

HDB resale prices were up by 2.6% in 2Q 2022. In 1H 2022, HDB resale prices have increased by 5.1%. Compared to quarterly price gains of around 3% in 2021, the price gains in 2022 has stabilised to around 2.5%.

The HDB resale market is showing signs of losing momentum. Usually the second quarter of the year is the busiest. However the estimated transaction volume in 2Q 2022 is 6,475 flats which is lower than 1Q 2022’s 6,934 flats. This is lower both on a quarterly and yearly basis.

There is increased resistance from buyers towards paying higher prices and cash over valuation. Some demand has also leaked to the HDB May 2022 SBF exercise where more than 24,000 applications were received. Some buyers have chosen to apply for BTO flats at Yishun which has a relatively shorter construction period of around 3 years.

However some buyers are chasing after the limited supply of 5-room and larger flats in the resale market. This has pushed up the prices of such flats and caused more to cross the million dollar price in 2Q 2022. As of 2Q 2022, there are an estimated 164 million dollar flat transactions. This is more than 60% of 2021’s million dollar flat transactions. There could be more than 300 million dollar flats in 2022.

The interplay of market dynamics from an increased supply of BTO flats and price resistance from buyers has worked well in stabilising the pace of price increase. There will be more million dollar flat transactions and more sales of flats that have reached their minimum occupation period in 2H 2022. Prices in the HDB resale market should adjust towards more stability in 2H 2022. In 2022, Huttons expect HDB resale prices to increase up to 10%.