Over the past year, HDB resale prices have been surging dramatically, with HDB prices rising for the 11th straight month in June, marking a 12% increase on a year-on-year basis. The prices for all room types grew, with three-room, four-room, five-room and executive flats seeing a 13.7%, 11.1%, 12% and 13% respectively. This is great news for HDB homeowners, many of whom have been able to sell their HDBs above valuation, making hefty profits. This begs the question – what’s causing this price surge? We’ve broken down 3 of the potential main causes, and how they can affect homeowners and homebuyers moving forward.
Potential Cooling Measures
With the property market surging even in the face of COVID-19, talks of potential cooling measures have been a hot topic for months now. The potential measures being floated include an increase in Additional Buyer Stamp Duty (ABSD), meaning property owners will have to fork out even more to own multiple properties, as well as a decreased Loan-to-Value (LTV) ratio, in essence decreasing the amount buyers can borrow as a home loan. With these potential cooling measures being floated, many buyers are taking the chance to purchase properties now, before any cooling measures are implemented.
Since the implementation of Phase 2 (Heightened Alert) restrictions, there has no doubt been a decrease in sales volume due to limitations on physical home viewings. However, even with the slight volume decrease, HDB prices have continued to climb! This may be due to the temporary nature of the restrictions, meaning sellers are anticipating a continued demand once restrictions are lifted, and are reluctant to lower prices.
A third reason for the HDB price surge is due to construction delays for new condo launches and BTO flats. With COVID-19 affecting the construction industry and causing delays due to a lack of manpower and work restrictions, this has had a ripple effect through the real estate market. In fact, these delays are particularly affecting first-time homebuyers, and the longer wait-time for delayed BTO flats has pushed many of them towards the HDB resale market instead, causing the sustained increase in prices..
How will this upward trend affect the overall HDB resale market?
A rise in HDB resale prices will lead to a higher chance of cooling measures being put in place due to an overheated market. Demand will rise further in anticipation of this, pushing prices up even more. For HDB homeowners, this means now is a great time to take advantage of the market opportunity, and maximize the value of your HDB flat. If you’re an HDB homeowner looking to sell your property, UnlockHome helps you unlock the value of your home, and get the maximum value out of it. Visit us at www.unlockhm.com, or drop us a call or message today!