2019 was a standout year for the HDB resale market, after a number of policy changes renewed interest in older HDB flats. According to OrangeTee & Tie research, 2019 saw a strong sales performance for most housing types.
“Based on flash estimates, there was no change in resale flat prices for 2019, indicating that prices have continued to stabilise. Total resale transactions are projected to reach around 21,500 to 22,000 units in 2019,” said Christine Sun, head of research and consultancy at OrangeTee & Tie.
If you’re looking at buying your next property in 2020, and might consider a resale HDB flat, here are a few things you should know about the Singapore HDB resale market in 2020.
1. Policy changes made in 2019 will continue to benefit the HDB resale market in 2020
There were a number of important changes made in 2019.
In May, the CPF Board relaxed rules on the use of CPF for the purchase of older flats. It allowed buyers to purchase older HDB flats as long as the lease left on them could last the homeowners to the age of 95.
Then in September, the Housing Development Board raised the income ceilings for first time buyers of HDB flats and executive condominiums by $2,000, and enhanced the CPF Housing Grant so more first time HDB buyers could be eligible for grants regardless of the location and type of flat they choose to buy.
Both these policies positively impacted the HDB resale market in 2019 and could continue to impact them in 2020.
“Some of these policies seem to have achieved their goal of improving housing demand especially for older flats. For instance, policy changes that allow buyers to use more Central Provident Fund (CPF) monies to buy HDB flats and the Home Improvement Programme (HIP) may have improved the attractiveness of older flats. As a result, the sales volume of older flats rose in many estates,” explained Sun.
2. The demand for HDB resale flats remains healthy in 2020
The outlook for the HDB resale market looks bright as a result of the recent policy changes. But that’s not all.
While headwinds from the global economy remain, OrangeTee & Tie research indicates that the easing of trade tensions, positive employment numbers, interest rate cuts, and strong income growth could continue to sustain demand and boost buyers’ confidence into 2020.
3. HDB Resale Volume could be higher in 2020
An estimated 21,500 HDB flats were transacted in 2019, a remarkable performance following the policy changes.
With the enhancement of the housing grants for first time buyers and the raised income ceilings, more buyers could be eligible to purchase a HDB resale flat in 2020. Coupled with a higher number of HDB flats reaching their 5 year minimum occupation period (MOP) in 2020 – and in turn higher numbers of homeowners looking to upgrade to a private home or bigger flat – there would also be a greater supply of HDB resale flats available.
As such, Sun is optimistic that the resale volumes for HDB flats will be higher at between 23,000 and 25,000 units.
4. HDB Resale Prices could jump by 2% in 2020
HDB resale prices stabilised in 2019, recovering from a slump in 2018. This was the result of the policy changes made in 2019, which arrested falling prices by stemming buyers’ concerns about lease depreciation of older flats and an increasing supply of HDB flats.
Sun expects the policy changes to continue to impact the resale market positively in the months to come, and is projecting a 0% to 2% growth in HDB resale prices.
5. HDB Rental transactions could reach 51,000 units in 2020
Singapore’s job market had a better than expected year in 2019, with rental transactions reaching over 47,000. “Employment growth was at its highest in five years. Hiring expectations remain upbeat this year with more employers intending to expand employment, which will bode well for the rental market,” says Sun. To that end, 2020 could see between 48,000 to 51,000 transactions, with prices set to grow by 0% to 2%.