Will HDB Resale Price continue to drop?

There’s an article on Singapore Business Review today that states that “according to PropNex’s CEO Mr Mohd Ismail, that the HDB flat resale price “will most likely head south”.

PropNex expects the HDB resale price will drop by 5-8%.

In my view, in the short run, resale prices are still undergoing a correction phase due to the shock of Government intervention into the market. Valuation should remain flat while only some desperate sellers are going to “lelong” their flats under market valuation.

In the intermediate run, I believe that prices will rebound with a growth of 1-5%. My view is still the same as before, resale flat valuation/prices will need to take inflation rate into consideration and continue to appreciate in value.

In other countries, someone may sell his/her flat and go lives in another city or town with cheaper property prices. But  in Singapore, if you sell your flat where are you going to stay after that?

That’s right, you will still need to buy another flat, apartment, house.

The new ruling in property purchase is a double edge sword. While restricting buying in the short run, it also cause a supply shock to resale flat supply. If you can’t buy a new condo, you won’t be selling your current flat.

For those upgrading from a HDB flat to another HDB resale flat, on one hand it is cheaper to buy, but on the other hand your existing flat can’t fetch good prices. So you are indifference.

This will result in a tight supply of resale HDB flat, and leads to a return in COV in the longer run.

And I like to bring up the topic again that if HDB valuation falls sharply, a lot of people (especially the middle class) will be in trouble now that their financing is much more expensive because they are paying a higher mortgage than before.

In short, COV will come close to zero in the short run. Resale valuation will remain stagnant in the short run.

In the long run, COV will return, valuation will continue to grow at the rate comparable if not higher than inflation rate.

Conclusion: NOW IS THE TIME to buy a resale flat if you do not own any. COV will not come down again until the next correction which can be as long as a decade, if not longer.

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Chi Siang Written by:

Hi! I am a Singaporean who used to work and live in Saigon for 6 years. I am married to my Vietnamese wife and we travel back to Saigon regularly. My years living amongst the Vietnamese and not amongst the expats community, gave me an unique insight into Vietnamese people, their culture, and their way of life.


  1. January 25, 2014

    Agents interviewed by the press said that it is now fairly easy for buyers to buy a flat without paying any COV or even find a flat that is priced below valuation. They said that there were more advertisements for resale flats going for absolutely no cash or below valuation.

  2. chisiang
    January 27, 2014

    The reason why COV will always be around is due to the failure of valuation agency to take into consideration the conditions and renovation of a resale unit. As well as higher demand for better location units than supply.

    What is happening right now is that those sellers (without merits) who are riding the previous COV wave are being weed out. They are forced to adjust their selling price.

    During my days searching for a resale flat, there were sellers who are asking unreasonable $20-30k COV yet their flats did not have a good location, nor special renovations to command any COV. Some had appalling conditions and yet still asked for $10k COV.

    On the other hand, those flats that were able to close with high COVs had really great ‘move-in-condition’ with a lot of effort put into the renovation, which are not taken into consideration during evaluation.

    Most buyers will pay the COV for well renovated units with great conditions. Same goes for great location.

    The rationale is that if you buy a poorly maintained unit, you still need to fork out cash to get the unit cleaned up, and maybe do up the toilets and kitchen. These will easily cost the buyer $20-30k. While a ready unit with done up toilet and kitchen sometimes have $20k COV. And most units who have a done up toilet and kitchen will most likely have good quality floor tiles and other enhancement made to the unit.

    It is simple maths once you add them up. A well done unit in good condition, even though with a $20k COV is still cheaper than a unit which is in poor condition with zero COV.

    In the short run, we are seeing those who are in desperate situation trying to fire sale their units. In 6 months time, these supply will dry up. As supply drys up, a price equilibrium will be restored and we will see prices stabilizing and appreciating.

    For now, the market is still undergoing correction. It is a buyer’s market for those fire sales units.

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