Huttons' comments on URA and HDB flash estimates
The private residential price index registered its second consecutive month of price gains in 3Q 2020, on the back of a sharp recovery in demand after the end of the circuit breaker. Sales volume in both the new and resale market in 3Q 2020 have exceeded the pre-pandemic levels and that put the market on a firm footing to recovery. The high national savings rate and low interest rate environment have also contributed to robust buying demand.
Fears over unemployment and economic contraction appeared to have subsided after the economy re-opened. Sentiments surveys conducted recently also showed that more companies are increasingly confident about prospects in the next few months.
There may be an initial reaction to URA's curbs on the reissue of options. But we believe the market has a reservoir of buyers with ample liquidity because of the high national savings rate. Sales volume in 2020 could match 2019's levels.
The HDB resale market experienced a strong recovery in demand after viewing was allowed. The delays in completion of BTO flats because of Covid-19 have diverted some demand to the resale market. The resale volume has exceeded the pre-pandemic levels and could even match that in 3Q 2018.
A recovery in the HDB resale market will also provide the additional sweetener for owners to upgrade to a private property or an EC.