The number of HDB upgraders engaged in private home transactions has declined as property prices continue to increase and mass-market launches weaken.
In contrast, private home dwellers are purchasing more homes as the economic condition improves, keeping the real estate industry afloat.
Buyers with HDB addresses bought 4,065 private houses in the third quarter, according to DTZ. This was 1.8 percent or 73 units higher than the previous quarter.
Though the numbers were increasing, the deals comprise a small proportion of the entire sales. It accounted for 37 percent of private house transactions in the third quarter, which dropped from 44 percent in the second quarter and 56 percent during the recent peak in the first quarter.
“This reflects the diminishing buying power of HDB upgraders as property prices rise,” said DTZ. It also said that private resale home prices rose 9 to 22 percent from the results in the first quarter.
Associate Director Eugene Lim of ERA Asia-Pacific pointed out that there were few mass-market launches in the third quarter. Due to increasing resale flat prices, HDB upgraders preferred more affordable projects early this year, thus reviving the property market.
But in October, the more expensive Core Central Region (CCR) had won over the other parts of the island in terms of new private home launches and sales. Developers worked out 339 units in CCR, exceeding 187 units in the Outside Central Region (OCR) and 40 units in the Rest of Central Region (RCR).
There were also 311 units sold in CCR, compared to 251 units in OCR and 249 in RCR.
For HDB upgraders, the buying mood may be weaker but it is still strong for private home dwellers. DTZ found that buyers with private addresses bought 6,837 units in the third quarter, a 37 percent increase from the previous quarter of 1,846 units.
These accounted for 63 percent of the total transactions in the third quarter, increasing from the 56 percent in the second quarter and 44 percent in the first quarter.
“Buyers with private addresses are more excited now,” says Chua Yang Liang, JLL’s head of research for South-east Asia. This is the effect of rosier economic sentiment, buoyant stock markets and improving liquidity, he added.
Not only are private housing residents purchasing more units but they are also paying more. According to DTZ, 66 percent of the total home buyers who purchased units in the third quarter paid more than $1 million.
On the contrary, HDB upgraders had smaller budgets. 30 percent of them preferred homes that cost between $600,001 and $800,000 and only 33 percent of the total HDB upgraders paid more than $1 million.
About 90 percent of the deals involving buyers with HDB addresses were located outside Districts 9, 10 and 11. Most of them were attracted to Trevista in Toa Payoh, Parc Imperial in Pasir Panjang and The Gale in the Upper Changi area.