Huttons’ comments on URA and HDB 3Q 2022’s numbers

Prices in the private residential market grew 3.8% in 3Q 2022. The price growth is the fastest since 4Q 2021 and is largely driven by the Outside Central Region (OCR) where prices accelerated to 7.5% from 2.1% in 2Q 2022. In the first nine months of 2022, private residential home prices have appreciated by 8.2%.

Three major launches in the OCR – AMO Residence, Lentor Modern and Sky Eden@Bedok are probably the drivers behind the 7.5% increase in the prices. This is the fastest pace of increase in OCR prices since 3Q 2009.

Prices in the RCR grew another 2.8% in 3Q 2022, more than the price gains in the CCR and they are closing the gap with the CCR. As of 3Q 2022, the estimated median psf of new homes in the RCR stands at $2,431, 13.5% lower than the median psf in the CCR. More buyers are purchasing homes in the CCR due to the narrowing price gap. Developers sold 562 units in the CCR in 3Q 2022 despite launching only 240 units for sale.

1,455 units were launched for sale in 3Q 2022. As there was no launch during the Lunar Seventh Month, the number of units launched in 3Q 2022 was much lesser than 2Q 2022’s 1956 units. Sales in 3Q 2022 are 2,187 units, close to 2Q 2022’s 2,397 units despite lesser units launched. Total developer sales in the first nine months of 2022 are 6,409 units.

The number of launched and unsold stock in the market stands at 2,133 units, the lowest level since 4Q 2018. In the wake of cooling measures and year-end holidays, developers may defer some private home launches to next year. Transaction volume may be slower in 4Q 2022 at between 1,000 and 1,500 units. New sales transaction volume may hover around 8,000 units in 2022.

Prices are likely to see stable growth of 1% to 2% in 4Q 2022. The market may see between 9% and 10% growth in 2022.

EC are relatively unaffected by the cooling measures. The first EC launch in Tengah, Copen Grand sold 73% of its units on launch day. There will be another EC, Tenet which targets to launch in Dec.

Rents for private homes jumped by 8.6% in 3Q 2022. This is the fastest pace of increase in private home rents since 3Q 2007. The return of foreign students and sustained hiring of expatriates are pushing up demand for homes in 3Q 2022. There has been some “musical chairs” movement of tenants as the rising rents have exceeded their budget and displaced some of them. Some of them have moved from the CCR to the RCR while some have moved from the RCR to the OCR. This has pushed up rents in both the RCR and OCR to 9.6% and 8.8%, respectively. This is the fastest pace of growth for both regions since 3Q 2007.

HDB resale prices were up by 2.6% in 3Q 2022, moderating from the 2.8% growth in 2Q 2022. In the first nine months of 2022, HDB resale prices has increased by 8%. In 2021, the average quarterly price gain was around 3.2% but this has slowed to 2.7% in 2022 to date.

Nevertheless HDB prices have gained 27.4% since the circuit breaker. This is an unsustainable trend and can put homes out of reach for first time buyers. Some buyers are flush with cash and can offer much higher prices to secure their dream home. The pandemic has increased people’s desire for more space and there has been more transactions of larger flats in 3Q 2022. These are seen as more affordable compared to the private options.

Based on data from data.gov.sg, there were 111 million dollar flat transactions in 3Q 2022, 35.4% higher than 2Q 2022. More million dollar flats are appearing in non-mature estates. There were 7 such transactions in 3Q 2022 compared to 4 in 2Q 2022. Bukit Batok and Punggol registered their first million dollar flat in 3Q 2022. An 1,776 sq ft executive maisonette in Bukit Batok was sold for $1,005,000 in July while in September, a 1,603 sq ft 5-room loft unit in Punggol was sold for $1.198 million with the buyer paying a COV of almost $200,000. As of 3Q 2022, there are 277 million dollar flat transactions.

An analysis of the million-dollar transactions in 2022 to date showed that buyers are turning their attention to 5-room and larger flats. There were 75 transactions in 1Q, 70 in 2Q and 105 in 3Q. The first nine months of 2022 saw 250 5-room and larger flats sold compared to only 210 in the entire year of 2021.

HDB resale prices are likely to moderate in 4Q in the wake of cooling measures. Private property owners (PPO) 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 PPOs and ex-PPOs. For seniors above 55 years old, they may still purchase a 4-room and smaller HDB flat without restrictions. Some demand may flow to the 4-room flats and push up prices. Currently the average price growth from 2Q 2020 to 3Q 2022 for 3-room, 4-room, 5-room and executive flats is 2.0%, 1.7%, 1.9% and 2.5%, respectively. There has been a sale of a 4-room flat at Pinnacle@Duxton for $1.37 million in October, making it the most expensive 4-room flat in Singapore to date. A 5-room flat at The Peak@Toa Payoh was sold for $1.38 million in Oct 2022, breaking the record to become the most expensive 5-room flat in the DBSS project.

On balance, there should be little impact on HDB resale volume. As of 3Q 2022, transaction volume of HDB resale flats is estimated at 21,299 units. HDB resale volume should stay in the range of 6,500 and 7,000 in 4Q 2022, translating into a full year volume of around 28,000 units. The largest ever BTO launch in Nov may draw some demand away from the resale market. Prices are likely to moderate further to 1.0% to 2.0% in 4Q 2022, giving rise to a full year price gain of not more than 10%.

In Nov, HDB will be launching its largest supply of BTO flats ever. There is a good mix across mature and non-mature estates and may draw demand from the resale market. There are a few prime sites in Nov that could be PLH – one in Kallang/Whampoa, one along Queensway and one at Ghim Moh. The BTO at Ghim Moh is likely to be a PLH BTO as Ghim Moh Ascent has been designated as a PLH. The Queensway BTO may be a PLH as it has community care apartments and can promote inclusiveness. The Kallang/Whampoa BTO should be very popular for its location next to a MRT station and Kallang River. The BTO in non-mature estates like Tengah and Yishun may be popular as they are adjacent to nature.