Continuing the trend of moderate price growth for resale flats, the latest HDB flash estimates indicate a modest uptick in prices for 2Q 2024, with the Resale Price Index rising to 187.6. Quarter-on-quarter (q-o-q), this represents an increase of 2.1% over 1Q 2024.
Similarly, the volume of resale HDB flat transactions showed upwards movement, reaching 7,208 units in 2Q 2024. This is 12.5% higher compared to the same period last year, which saw 6,275 transactions.
More buyers could also be turning towards the resale HDB market in response to strong headwinds. These include cooling measures, slower economic sentiment, higher-for-longer interest rates, and higher private housing prices in the Outside Central Region (OCR). A combination of these factors might make resale HDB flats a more attractive value proposition.
Likewise, with the initial batch of private property sellers exiting the 15-month wait-out period in January this year, this may have spurred greater demand in the resale HDB flat market. Coupled with the aforementioned supply constraints for MOP flats, this factor likely contributed to an upturn in the number of HDB flats sold with a million-dollar price tag.
HDB Price Index
The HDB resale price index exhibited stable growth, rising by 2.1% q-o-q to 187.6 in 2Q 2024; this marks the highest growth observed since 4Q 2022. The price index also saw an uptick of 6.5% year-on-year (y-o-y).
HDB Resale Transaction Volume
Based on resale flat transactions, the volume of HDB resale flat transactions reached 7,208 units, up from 6,297 cases in 2Q 2023.
Chart 1: HDB Resale Index vs Number of Transactions
Source: HDB as of 1 July 2024, ERA Research and Market Intelligence
Year-high demand for flats in mature estates
2Q 2024 saw 2,517 resale transactions in mature estates. This marks a 7.7% increase y-o-y. As some of these mature estates are likely to fall under the “Prime” category for future BTO launches, buyers looking for homes in such estates might have chosen to enter the resale market instead.
This is because existing resale flats are not subject to the more stringent resale conditions placed on Prime Location Housing Model flats.
In the February Build-To-Order (BTO) sales exercise, there was a lack of flats in mature estates, with only 961 units launched solely in Bedok. Buyers that prefer to stay in these well-established estates could have turned to the resale market instead, resulting in the increase in transactions.
Million-dollar flats
With fewer number of flats meeting the Minimum Occupation Period in 2024, demand for MOP flats in prime locations have skyrocketed, resulting in the rising number of million-dollar flats.
A total of 236 million-dollars flats were transacted in 2Q 2024. This is only made up 1.7% of total resale transactions in the same quarter. This brings the total number of million-dollar flats in 1H 2024 to 419, compared to 208 in 1H 2023.
Likewise, with the initial batch of private property sellers exiting the 15-month wait-out period in January this year, this may have spurred greater demand in the resale HDB flat market. Coupled with the aforementioned supply constraints for MOP flats, this factor likely contributed to an upturn in the number of HDB flats sold with a million-dollar price tag.
Chart 2: HDB Million-dollar Flats by Flat Type
Source: data.gov.sg, HDB, ERA Research and Market Intelligence
Buyers seeking out larger homes in centrally located areas, or near amenities and transport hubs are willing to pay a premium for these homes, leading to these transactions taking place. However, as they only make up a small number of transactions, they do not have a big effect on the transaction prices.
Upcoming BTO launch could help alleviate demand
The June BTO launch that recently concluded saw an application rate of 3.1, the highest since May 2023. With 24,179 applicants participating in the exercise (the highest since November 2022), we can possibly see less demand for resale flats in the upcoming quarter as these participants wait out for the results.
In the government’s active efforts to create affordable and diverse housing options for all, we will see the launch of 14 new Build-To-Order (BTO) projects in October, consisting of 8,500 units. This will be the first BTO launch that will include the new classification of Standard, Plus, and Prime flats.
For example, this launch would include homes in mature estates and prime areas, such as the three project offerings in Kallang/Whampoa – an area known for high resale transaction prices. By offering homes in such areas with a fresh 99-year lease, this could alleviate demand in the area.
Conclusion
The HDB resale market saw an uptick in transaction volume amid moderate price growth. Amid the current climate of economic uncertainty, potential HDB upgraders might take a more cautious approach in their upgrading plans to a private property.
Some of them might not be willing to let go of their larger flats unless an offer matches their expectations due to higher cost of replacement homes.
The BTO launches in June and October are set to fulfil HDB’s commitment of 19,600 flats in 2024. But with the re-classification of BTO flats, we can expect some buyers to turn to the HDB resale market in efforts to avoid the more stringent resale conditions.
Going forward, we can still expect strong demand and competitive prices for larger flats, such as 5-room and Executive flats, as the upcoming Plus and Prime BTO flats do not include 5-room or larger layouts.
Performance of the resale market should stay accurate to ERA’s 2024 forecast of 3-5% growth in prices, with 26,000 to 27,000 resale flats expected to move.