HDB resale prices rose slightly by 0.3 per cent in March compared to February, according to a flash report by the Singapore Real Estate Exchange (SRX).
The price increase was led by smaller flats -- 3-room flats rose 0.5 per cent and 4-room flats increased by 0.8 per cent.
But prices of bigger flats -- both 5-room and executive flats -- continued to soften, dropping by 0.2 per cent and 0.7 per cent respectively.
On a year-on-year basis, prices in March 2014 were down 4.9 per cent from the same period last year.
Jeremy Lee, co-founder of SRX, said: "Bigger units face more challenges in today's market. Buyers can only use up to 30 per cent of their monthly income to service an HDB loan, which significantly reduces their ability to afford bigger flats.
“Consequently, reduced demand drives prices down for bigger HDB flats compared to smaller flats with a smaller price quantum."
However, resale volume saw some recovery.
According to the Housing and Development Board (HDB) resale data compiled by SRX, 1,319 HDB flats were sold in March's resale market, a close to 40 per cent month-on-month increase from February's 951 units.
It was also the highest monthly volume observed since last October's 1,393 resale units.
Some property watchers said that the jump in March could be due partly to seasonal factors.
Colin Tan, director and head of research and consultancy at Suntec Real Estates Consultants, said: "It partly could be due to the fact that Christmas and Chinese New Year are quite close this time around. And because of the holiday mood and festive occasions, there could be (fewer) viewings.
"So what could possibly be transacted in December, January or February may actually come up in March."
On a year-on-year basis, March's resale volume was close to the 1,356 units resold in the same month of last year.
Mr Lee said: "On the demand side, prices have become more affordable after a five per cent drop from last year's peak. The policy change to shift the focus away from COV is likely to result in a more manageable cash outlay for most buyers. These factors can contribute to more buyers coming back to the resale market.
“On the supply side, there will be ample sellers from HDB upgraders that will collect their keys this year to their new BTO flats. These upgraders will need to sell off their old flats within six months from receiving the keys. Therefore, downward pressure on prices will persist until the demand-supply equilibrium is restored.”
Rental volume also rose to its highest in the past eight months.
An estimated 1,627 HDB flats were rented out in March 2014.
Despite an 8.6 per cent drop year-on-year, March's rental volume was the highest in the past eight months.
Overall median rental prices remained flat at S$2,300 for the fourth consecutive month.
SRX said overall HDB prices continue to face downward pressure as many buyers are paying at value below recent transactions, or what is known as the X-Value.
More than 98 per cent of all HDB transactions in 2014 have their valuation prices fall within 10 per cent of the X-Value.
Going forward, some property analysts said that they expect prices to moderate -- given the new HDB resale negotiation process announced recently.
Under the new rules, buyers and sellers will have to base their negotiations on recent transaction prices, and valuations can only be obtained from the HDB after a transaction price has been agreed upon.
Donald Yeo, head of marketing and training at HSR International Realtors, said: "The market price will be stabilised. Sellers will tend to be more realistic in their prices. The public will be educated to look at transaction prices instead of valuation.
"On the whole, I think (the resale market) will be pretty healthy. But it takes time to transit."
And when the market gets used to the new process, analysts said they expect HDB resale flats to attract more buyers.
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