HDB resale prices dipped 0.3% in Q1

Leases for older flats are still falling despite the introduction of the VERS and HIP programmes.

Housing and Development Board’s (HDB) resale flat prices dipped 0.3% QoQ to 131 in Q1 2019, according to its flash estimate of the Q1 2019 Resale Price Index (RPI).

The RPI provides information on the general price movements in the resale public housing market. The RPI for the full quarter, together with more detailed public housing data, will be released on 26 April.

According to ERA Realty Network’s key executive officer Eugene Lim, the dip is similar to the 0.2% decrease seen in the preceding quarter.

“The concern of depleting leases of older resale HDB flats was in the spotlight earlier this year. However, PM Lee has addressed this concern in his National Day Rally speech, where VERS and the new HIP programmes were introduced. In this regard, we have not seen an immediate impact on resale flat prices,” Lim said in a statement. 

However, over the longer term, as these policies start to be implemented, he expects a change of mindsets towards older resale HDB flats that are affected by depleting leases.

Also read: Million dollar HDB resale flats on the rise

Lim also noted that the Lease Buyback Scheme was expanded to include all flat types with effect from 1 January, whilst Minister Lawrence Wong has mentioned that they are making changes to allow more flexible usage of CPF funds for the purchase of flats with shorter leases.

ERA forecasts HDB resale demand to be resilient in 2019 due to an estimated 27,000 flats reaching the Minimum Occupation Period (MOP) in 2019, and as well as the lingering effects of July’s cooling measures on buyers with a tighter budget. Lim also added that some en bloc beneficiaries who have received or are receiving their proceeds may choose to downgrade to HDB flats in order to keep more funds for other uses.

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“Resale flats are still an attractive option to buyers, regardless new or old. Newer flats have a longer remaining lease and hence usually a higher price tag, whilst older flats may be more spacious and cheaper,” he noted, adding that resale flats also are the only way for buyers to pick a flat in their location of choice.

In May 2019, HDB is expected to offer about 3,400 Build-To-Order (BTO) flats in Kallang Whampoa, Tengah and Woodlands. There will also be a concurrent Sale of Balance Flats exercise.

For 2019, ERA forecasts resale HDB prices to increase very marginally by up to 1% for the whole year.