Deciphering the Dynamics: Understanding the Upsurge in HDB Resale Prices

Jee Sheong

April 18, 2024

Table of content

In the first quarter of 2024, we’ve observed a 1.7% rise in prices for resale Housing Development Board (HDB) flats. This increase surpasses the 1.1% growth seen in the previous quarter, extending the trend of rising HDB resale prices for the sixteenth consecutive quarter since Q2 2020.

Despite the 6.2% year-on-year increase in HDB resale prices, there are indications that the market is stabilising. In 2023, resale prices rose by 4.9%, marking a decrease from the 10.4% increase in 2022 and the 12.7% climb in 2021. This suggests a trend towards a more balanced resale market.

This article explores the trends in HDB resale flat prices and discusses key points to consider as you navigate Singapore’s real estate market.

A Closer Look at HDB Resale Price Growth

The 2.8% price growth observed from Q4 2023 to Q1 2024 mirrors the cumulative increase witnessed between Q2 and Q3 2023.

During the first quarter of 2024, a total of 6,928 HDB resale flats were transacted, marking a 5.5% uptick from the corresponding period in 2023, where 6,567 units were sold. This surge in HDB resale transactions may be attributed to a growing number of first-time buyers opting for resale flats as an alternative to Built-to-Order (BTO) flats, seeking to bypass the lengthy waiting times associated with the latter. Additionally, the shift towards resale flats could be influenced by the reduced frequency of BTO sales exercises. Previously, BTO sales exercises were conducted four times a year, but starting from 2024, they will occur only three times a year— in February, June, and October.

Unprecedented Record Sales of Million-Dollar HDB Flats

In January 2024, an unprecedented 74 resale HDB flats were sold for at least $1 million each, setting a new record. This surge in high-value transactions was primarily driven by a heightened demand for larger resale flats. Notably, prices for resale flats saw an across-the-board increase in both mature and non-mature estates, with five-room flats experiencing the most significant uptick of 2.1%. The number of transactions involving five-room flats surged by 33.3%, from 456 units in December 2023 to 608 units in January 2024, marking the highest figure since September 2022. Notably, the number of resale HDB flats (five-room or larger) sold in Q1 2024 increased by 10% compared to the previous quarter.

Four-room flats constituted the majority of resale HDB transactions in January 2024, accounting for 45.6%, while five-room units made up 23.8% of transactions. Of the 74 million-dollar transactions recorded in January 2024, 19 involved four-room flats, 31 were five-room flats, and 24 were executive apartments (EAs). These transactions were primarily concentrated in mature estates such as Bishan, Bukit Merah, Kallang/Whampoa, Toa Payoh, Queenstown, and Ang Mo Kio, with a smaller number occurring in non-mature towns like Yishun, Punggol, and Woodlands.

The surge in million-dollar flat sales in January 2024 can be attributed to previous private homeowners who completed their 15-month wait-out period after selling their private properties. January 2024 marked the earliest month for this batch of private downgraders to become eligible to purchase resale HDB flats following the implementation of the wait-out period in September 2022 as a measure to stabilise the resale HDB market. In essence, this group of homeowners, who observed the 15-month wait-out period, also significantly contributed to the increase in resale HDB transactions.

It’s crucial to acknowledge that even though there has been a rise in the number of million-dollar transactions, these occurrences remain rare within the broader context of the HDB resale market. In January 2024, the remarkable 74 resale HDB flats sold for at least $1 million constituted just 2.8% of all resale HDB transactions during that period.

Considerations for Resale HDB Buyers

Based on the trends discussed above, there are several key points worth noting that can guide you in navigating your real estate journey effectively.

Higher Demand For Larger Flats

For first-time homebuyers, the current trend favouring larger resale HDB flats suggests that opting for such properties might be a prudent choice. Doing so could potentially benefit you in the future, as it would broaden your pool of potential buyers should you decide to sell the property down the line. However, it’s important to note that the increased demand for larger flats often translates to higher prices. Therefore, it’s crucial to conduct a comprehensive analysis of the available resale options and carefully consider your financial situation. This ensures that you make an informed decision that aligns with your long-term financial and lifestyle goals, without overpaying for your chosen property.

Preference For Newer Flats

In March 2024, resale flats with a remaining lease of 90 years or more accounted for the highest proportion of overall resale transactions at 26.8%. This trend contributed to the overall price growth of resale HDB flats, as newer flats typically command higher prices. Considering the remaining lease of your chosen flat is crucial when selecting a resale HDB flat. Opting for a flat with a shorter lease could limit your potential pool of buyers if you decide to sell in the future. Conversely, the strong demand for newer flats may drive up their prices, underscoring the importance of carefully assessing your options to avoid overpaying.

New HDB Classification Framework

The new HDB classification framework will be kicking in from the next BTO sales exercise in June 2024. The additional consideration of resale restrictions for Plus and Prime flats will become crucial for asset progression given the lengthy Minimum Occupation Period (MOP) of 10 years and limited pool of exit audience (income ceiling of $14,000). For current owners, the advantage is that there will likely be a stronger demand for flats near MRT stations and town centres that do not fall under the Plus or Prime categories. As the government steps in to further clamp down on the ‘lottery effect’ of the BTO system, aspiring homeowners should weigh their options carefully and project further into the future. 

Closing Thoughts

As we navigate these resale HDB trends, it’s crucial to consider key takeaways for potential homebuyers. The preference for larger flats suggests that opting for such properties may offer advantages in terms of future resale potential, albeit at potentially higher prices. Similarly, the preference for newer flats underscores the importance of considering the remaining lease when making purchasing decisions.

In essence, the HDB resale market continues to evolve, presenting both opportunities and challenges for buyers and sellers alike. By staying informed and conducting thorough assessments, individuals can make informed decisions that align with their long-term goals and financial considerations.

Looking to get a resale HDB flat? Check out our previous guide on navigating the HDB resale process here. If you are looking for further guidance in your real estate journey, feel free to reach out to us here. We will be glad to guide you through the process and offer a tailored consultation to help you reach an informed decision. 

Thank you for reading and following PLB. Do stay tuned as we bring you more updates and insights on Singapore’s real estate market.

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