Experts say HDB resale prices to remain healthy in 2022, but no double-digit growth anytime soon

Experts say HDB resale prices to remain healthy in 2022, but no double-digit growth anytime soon
PHOTO: The Straits Times

Last year was an exceptional year for the HDB resale market, with prices increasing by 12.5 per cent for the whole of 2021.

Just weeks before the year ended, the government announced an increase in the number of BTO flats to be launched in 2022 and 2023. On top of that, the loan-to-value (LTV) limit for HDB housing loans was reduced from 90 per cent to 85 per cent.

With that, we asked property experts for their take on the HDB resale market. This includes predictions for this year’s price growth, last year’s double-digit growth and the impact of the reduced LTV of HDB housing loans.

Slower growth of HDB resale prices in 2022

In general, experts predict a slower pace of around 4 per cent to 8 per cent price growth for this year.

“The run-up in HDB resale prices that we have witnessed so far is certainly going to cool somewhat in the coming quarters. But we expect the underlying robust demand will likely sustain price increases in 2022, albeit more moderate than a double-digit growth seen last year,” says Pow Ying Khuan, Head of Research at 99 Group.

According to Wong Siew Ying, Head of Research and Content at PropNex Realty, demand drivers that have led to buying interest in the resale market last year “should still support resale demand this year”. These include construction delays and the long waiting time, resale grants, firm private home prices and tight supply of mass-market private homes.

Pow points out that demand for resale flats will continue to come from households ineligible for new flats as well, such as households comprising only PRs and those whose income has exceeded the current BTO income ceiling.

But it is not just the high demand that will continue to push up the resale prices.

“Existing HDB owners are unable to move to their new BTO flat, EC or private homes, hence delaying the sale of their current flat. This limits the availability of flats for sale. Buyers who have an urgent need for a home have to compete for the limited supply of resale flats, pushing up prices in the process,” explains Mark Yip, CEO of Huttons Asia.

At the same time, he highlights that price resistance will set in the resale market at some point.

“Buyers, in general, will be more prudent in their purchases, and sellers may adjust their price expectations moving forward,” adds Christine Sun, Senior Vice President of Research & Analytics at OrangeTee & Tie.

She also points out that the demand and supply imbalance will persist and keep prices rising, albeit at a slower pace. “It may still take some time for the construction companies to clear the backlog of completion delays for BTO flats.”

“If supply-chain issues and manpower shortage persist in the construction of BTO flats, some buyers such as young couples with more immediate housing needs may continue to prefer resale flats,” says Pow.

With that, he estimates that the HDB resale volume this year will remain strong despite HDB’s plan to ramp up supply. However, it will be slightly lower than last year’s figure.

Yip adds that given the limited supply of flats for sale, the transaction volume of resale flats will moderate to around 27,000 this year.

Double-digit growth is not likely to happen anytime soon

Last year’s 12.5 per cent price growth is the first double-digit growth since 2011, when prices increased by 10.7 per cent. It was also the highest annual growth since 2010, when the price growth reached 14.1 per cent.

A similar increase of 13.6 per cent was also reported in the 99-SRX HDB Resale Price Index for December 2021.

“The double-digit percentage growth of the HDB Resale Price Index in 2021 is due to the convergence of factors that are beyond anyone’s control,” says Nicholas Mak, Head of Research and Consultancy at ERA. He attributes the supply chain disruption caused by the pandemic that led to the BTO construction delays as the main factor.

With that, experts believe it will be some time before we see another double-digit growth in the HDB resale market.

“This year, prices may not hit double-digit growth, given the cooling measures and more BTO launches on the cards,” Sun says. However, she adds that prices may rise again should the demand-supply situation persists. This can be due to the pandemic worsening such that a lockdown is necessary, although this possibility is quite unlikely.


Wong adds that a double-digit growth is unsustainable. “We do not think a continued double-digit increase in prices is sustainable, nor is it healthy for the housing market. We expect to see single-digit price growth at least in the next couple of years, particularly as interest rates are set to rise steadily in the coming year.”

Pow comments that seeing a double-digit price growth occurring in a single year for a relatively mature housing market like the HDB resale is rare. So having such growth in consecutive years would be unsustainable in the long run.

“As the world cautiously moves into the Covid-19 endemic phase, we may start to see some of the aforementioned factors to normalise (i.e., impending rate hikes, easing pent-up demand, gradual recovery in supply chain and labour shortage) to a certain degree. So it could be a while before we witness another double-digit yearly price growth in the HDB resale market.”

Impact of the reduced LTV for HDB loans on the resale market

On the back of a robust property market, the government announced a new round of cooling measures just before midnight on Dec 15. This includes reducing the LTV for HDB loans from 90 per cent to 85 per cent. However, this may not have much impact on the resale market.

Mak does not think the reduced LTV is effective in cooling the resale market. He highlights that the 85 per cent LTV is still very high, compared to the LTV for property loans for banks. The LTV for bank loans is now at 75 per cent.

“The increase in the supply of BTO flats to 23,000 flats in 2022 and 2023 and the timely delivery of such flats will be a more effective method to cool the HDB resale market.”


Likewise, Yip believes the reduced LTV has little impact on the resale market. “Most buyers will opt for a loan from the banks as the interest rate is much lower than HDB’s interest rate.”

Agreeing that some buyers could be borrowing from financial institutions instead of HDB, Sun adds that some may not apply for the maximum loan amount as well. “Those who buy million-dollar flats or pricier flats in mature estates may have the financial means.”

Pow believes that the reduction is more of a pre-emptive measure to encourage greater financial prudence among buyers, adding that a mere drop of 5 per cent in terms of LTV would have minimal effect on affordability.

Similarly, Wong thinks it would encourage buyers to be more prudent in their flat purchase, commenting that the effect is likely to be more varied among different groups of buyers.

“We think it will likely have a bigger impact on buyers who have a tighter cash flow. Many households who have ample savings or are able to get financial assistance from family members will be less affected.”

This article was first published in

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