Huttons' comments on URA and HDB 4Q 2022's flash estimates | Huttons Group

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Huttons’ comments on URA and HDB 4Q 2022’s flash estimates

Huttons Research


It was a quiet last quarter of the year with no major private residential launches. Prices were stable, growing by 0.2% in 4Q 2022 as there was no new launches with benchmark prices in 4Q 2022 and sales volume were lower by almost 50% quarter-on-quarter. For the full year, prices increased by 8.4% compared to 10.6% in 2021.
Prices in the OCR declined by 2.6% as demand in this segment of the market is more sensitive to interest rates and HDB upgraders. The higher interest rate is affecting the demand from price sensitive buyers as their ability to borrow is crimped. At the same time, prices in the HDB resale market are also slowing down and that reduced some of the liquidity for HDB upgraders.
An estimated 500 to 600 units were launched for sale in 4Q 2022. This is the lowest quarterly launch volume since 1Q 2003 where only 506 units were launched for sale. For the full year, an estimated 4,500 to 4,600 units were launched which is less than half of 2021’s launch volume. This is probably the lowest number of units launched for sale since URA started the data.
Developer sales in 4Q 2022 are estimated to be in the range of 700 to 800 units. For the full year, developer sales are unlikely to exceed 7,300 units. This is a 44% drop from 2021’s volume but it is within expectations as launch volume is significantly lower as well.
There were two EC launches in 4Q 2022 – Copen Grand and Tenet. The two EC launches were very well-received by the market, selling more than 70% on launch day. Copen Grand is fully sold just a month after its launch. Tenet could possibly sell out in Jan 2023.
The supply of new homes will pick up in 2023 to an estimated 10,000 to 12,000 units spread over 40 launches. The return of Chinese buyers is a wild card that may boost volume but not in a significant way. Interest rate is expected to peak in 2023. It is unlikely to affect demand for new launches as the drawdown on loan is on a progressive basis. However higher interest rates may weigh on the resale market. Higher construction costs and low unsold supply in the market may add upward pressure by up to 5% in 2023.
HDB resale prices eased further in 4Q 2022 to 2.1% after the Sep 30 cooling measures. This is the slowest quarterly increase since 3Q 2020. For 2022, HDB resale prices have increased by 10.3%, easing from the 12.7% increase in 2021.
More HDB owners are open to negotiations after the cooling measures and it is reflected in the slower price increase. Higher interest rates and buyers’ resistance were also headwinds for the HDB resale market in 4Q 2022.
The number of million-dollar flat transactions appeared to have moderated in 4Q 2022 after the Sep 30 cooling measures. Based on data up to 29 December 2022, an estimated 92 such flats were sold in 4Q 2022. This is 17.1% lower than the previous quarter. In 2022, the number of million-dollar flats is estimated to be 369 or 1.3% of the estimated total transaction volume of 27,773.
There had been more flats in non-mature estates that were sold for a million dollars and more. The large sizes of flats in non-mature estates is a key draw for buyers.
The number of million-dollar flat transactions is estimated to reduce to between 120 and 240 in 2023 as the cooling measures and higher interest rates curtail demand. Some buyers may also rethink paying a million dollars for an old HDB flat.
HDB will launch more than 8,000 BTO flats for sale in 1H 2023. Some of these flats may have shorter waiting time and may attract some buyers away from the resale market. The higher interest rate in 2023 may also deter buyers from the resale market and see them applying for a BTO flat.
On balance, HDB resale flat transactions are estimated to be in the range of 24,000 to 26,000 in 2023. Resale flat prices are likely to trend towards stabilisation and see not more than 5% increase in 2023.