HOUSING and Development Board (HDB) resale prices continued to rise in the last quarter of 2023, albeit at a slower pace of 1 per cent, compared with 1.3 per cent in Q3.

Q4 resale price growth was also lower than the average quarterly growth of 2.5 per cent in 2022, according to flash data from HDB on Tuesday (Jan 2).

The full-year increase of 4.8 per cent was significantly less than the 10.4 per cent rise in 2022 and the 12.7 per cent increase in 2021, noted OrangeTee & Tie’s senior vice-president of research and analytics Christine Sun.

Wong Siew Ying, PropNex’s head of research and content, said: “The implementation of various cooling measures in September 2022 has taken the wind out of the sails, and HDB resale prices are now growing at a considerably slower clip, with the quarterly price growth never once crossing the 2 per cent mark in 2023. This is a noteworthy trend given that the pace of price growth in each quarter has been well over 2 per cent or 3 per cent between Q4 2020 and Q4 2022.”

“We think this presents a more sustainable trend of price movement, following two years of healthy gains,” she added.

Tan Tee Khoon, PropertyGuru Singapore’s country manager, said that the “buoyant HDB resale prices were due to the number of HDB resale flat sales that fetched seven figures”.

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Million-dollar flats

Demand for such “million-dollar” flats originated from first-time buyers and HDB upgraders who were seeking private properties but were priced out in a post-pandemic property market, he said. 

“These buyers were house-hunting for private homes above 1,000 square feet. As there were no signs of private home prices and interest rates coming down, many of these property seekers turned to resale flats, which offer great value for the space offered,” Tan said.

PropNex’s data showed 134 resale flats transacted for at least S$1 million during the fourth quarter, taking the total to 470 for 2023. This is about 26.8 per cent higher than 369 transactions in 2022.

Wong said that this was also the first time that “every quarter in a year saw more than 100 flats resold for S$1 million or more”. She expects the number to remain elevated as homebuyers seek out superior locations. Private property owners who are looking to “downgrade” and have come out of the 15-month wait-out period imposed from last year may also start trickling into the resale market, and have the means to pay higher prices, she said.

On average, resale prices saw muted growth across various flat types, Wong noted. Prices crept up by less than 1 per cent in Q4 from Q3.  

“Four-room flats led the resale price increase in the quarter, with the average price rising by 0.7 per cent to S$594,212, while the average price of three-room and five-room resale flats each climbed by 0.6 per cent to S$415,491 and S$693,846 respectively in Q4 2023,” said Wong.

Resale volume was down 2.3 per cent on the quarter to 6,440, the lowest fourth-quarter volume since 2020.

The rescheduling of Build-To-Order (BTO) flat launches in August to October and December likely drew some attention away from the resale market, said Mohan Sandrasegeran, head of research and data analytics at Singapore Realtors Inc (SRI).

“The BTO launches in Q4 saw approximately 24,346 applicants competing for a total of 12,857 BTO flats,” he said.

Implications

The reclassification of BTO flats as Standard, Plus and Prime starting from the second half of 2024 may also have implications. Plus and Prime flats will come with resale curbs and a longer minimum occupation period (MOP) as well as subsidy clawbacks.

“Some buyers might have been inclined to apply for BTO flats before these changes are enacted,” said SRI’s Sandrasegeran.

For the full-year period up to Dec 28, 2023, total resale volume stood at 26,628 cases, down 3.8 per cent from the 27,686 recorded in the year before. 

Overall supply of resale flats rose in Q4 2023, as more owners moving into new homes have started to put their flats up for sale, said Lee Sze Teck, Hutton Asia’s senior director, data analytics. 

ERA Singapore’s chief executive officer, Marcus Chu, said: “Resale flats in mature estates are seeing resilient demand. There are fewer resale flats supplied and these units are being sold quickly once they are put up in the market.” 

For resale flats in the non-mature estates, more flats are being put up for sale and some units are taking a much longer time to sell, Chu said.

The three HDB towns with the highest number of million-dollar flats were Bukit Merah, Toa Payoh and Kallang/Whampoa. These towns accounted for 36.5 per cent of million-dollar flat transactions in 2023, according to Huttons.

HDB launched 22,780 BTO flats for sale in 2023. Total flats launched stood at 24,447 flats, after including 1,500 units under the Sale of Balance Flats exercise and 167 offered under its open booking of flats.

Median first-timer application rates for three-room and bigger BTO flat units have been moderating, HDB said. The median application rate for first-timers in three-room flats fell to 0.9 during the Q4 2023 sales launches, and 0.8 for bigger units. During the pandemic period (2020 to 2022), the rate ranged from 2 to 6.8.

Intense competition

Nicholas Mak, Mogul.sg’s chief research officer, noted that at 22,780, the number of new BTO flats launched this year was close to the 23,184 flats launched in 2022.

“This is an exceptionally high supply of new flats, launched in the past two years in response to the high demand for affordable public housing. By comparison, in the seven-year period from 2015 to 2021, HDB launched an average of 16,400 flats annually,” he said.

In February this year, HDB will offer around 4,100 flats in Bedok, Queenstown, Choa Chu Kang, Hougang, Punggol and Woodlands.

“Sellers will continue to face intense competition for buyers this year,” said Sun.

OrangeTee & Tie estimates an additional 37,000 flats may be launched by the government to meet the target supply of up to 100,000 flats from 2021 to 2025, and this may shift some demand away from the resale market. Over 63,000 BTO flats have been sold from 2021 to 2023.

Sun said: “Despite the increased competition from the BTO market, a significant drop in resale prices is unlikely in the near term. The scarcity of MOP flats will help to support prices in certain locations. 

The number of flats reaching their five-year MOP and potentially entering the resale market has fallen from 30,920 units in 2022 to 15,549 units in 2023. MOP supply is projected to decrease further in 2024 to 11,952 units, she added. 

ERA projects resale transactions to reach between 26,000 and 27,000 units by end-2024.

OrangeTee & Tie estimates that resale prices could rise by 3 to 5 per cent this year, comparable to or slightly lower than the 4.8 per cent increase in 2023.