HDBHDBHDBHDB resale prices practically unchanged resale prices practically unchanged resale prices practically unchanged resale prices practically unchanged

throughout the yearthroughout the yearthroughout the yearthroughout the year Prices of resale Housing and Development Board (HDB) flats in 2016 have been generally stable. Over the

year, it has only fallen by 0.1%. This contrasts with the 1.6% price decrease in 2015. Despite the slowing

economy, HDB resale prices have not been affected as much as their private residential counterparts.

A major reason is the difference in characteristics between HDB resale buyers and private residential

property buyers. As a no frills housing unit, HDB flats satisfy a housing need, whereas private

condominiums are more of a housing want, with their higher prices and more luxurious facilities. Hence,

HDB prices tend to be less correlated to Singapore’s economic performance.

Another factor which contributed to the stability of the HDB resale market was the decision of HDB to

publish daily transaction details online, available for public access. While not a new announcement by HDB,

we have seen more widespread usage of this information. Buyers use it as a basis to make offers while

sellers use it as a gauge when deciding whether to accept offers. Negotiations are usually centred around

recently transacted prices, and ultimately, the deal will be concluded at a price which does not differ too

much from past prices. This is because sellers do not want to be getting a bad price for their flat, and

buyers will not want to be overly bullish in their offers.

Figure Figure Figure Figure 1111 HDHDHDHDB Resale Price IndexB Resale Price IndexB Resale Price IndexB Resale Price Index

Source: HDB, ERA Research

Improvement in resale volumeImprovement in resale volumeImprovement in resale volumeImprovement in resale volume The number of resale transactions increased in 2016. 20,813 units were transacted, a 7.8% increase over

2015’s full year figure of 19,306 units.

The increased number of transactions could be partly due to the price stability we have seen for the whole

of 2016. Buyers no longer fear that prices will plunge soon after they commit to their purchase. Instead,

they are more confident that they are buying near the bottom of the market.

Also, the amount of grants available to resale buyers has increased. With the introduction of the Proximity

Housing Grant in August 2015, buyers are given a one-time grant of up to $20,000 if they purchase a flat

near their parents. As Minister Lawrence Wong noted recently, more than 4,300 families have benefitted

from this new grant. Among the applicants, 56% would not have qualified for any grants prior to the

introduction of the Proximity Housing Grant. Hence, the new grant has contributed to the higher volume of

transactions.

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Figure Figure Figure Figure 2222 Resale volume of HDB flatsResale volume of HDB flatsResale volume of HDB flatsResale volume of HDB flats

Source: HDB, ERA Research *Data till end November 2016

More transactionsMore transactionsMore transactionsMore transactions expected for 2017expected for 2017expected for 2017expected for 2017 Currently, transaction volume is steadily increasing, while prices remain stable. Moving forward into 2017,

we expect stability to remain the key trend in the HDB resale market. Despite another slow year for the

economy in 2017, we remain confident that the HDB resale market will see a healthy number of

transactions. Those with housing needs will continue to prop up the market, as they cannot postpone their

purchase. Meanwhile, prices are expected to remain generally stable as buyers’ purchasing power is

capped by the cooling measures still in place. Unless the government tweaks or removes some of the

measures, prices should be seeing a very gradual recovery.

The full year price change for 2017 could be in the range of -0.5% to +0.5% while resale transaction volume

is expected to be in the range of 20,000 to 22,000. This corresponds to a rough 10% increase over the

20,813 units transacted in 2016.

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