HDB resale prices speed up in Q3, rising 2.5%; over half of flats now sold for S$600,000 or more
Strong demand, tight supply fuel momentum and higher sales volume in public housing market
HOUSING and Development Board (HDB) resale prices accelerated in the third quarter of 2024, rising 2.5 per cent on robust demand amid still-tight supply conditions.
The rise in flat prices follows a 2.3 per cent hike in Q2, and is higher than the 1.3 per cent recorded in the same period last year, HDB flash estimates indicated on Tuesday (Oct 1).
It is also the fastest growth since the third quarter of 2022, when prices rose by 2.6 per cent, noted Christine Sun, OrangeTee Group chief researcher and strategist.
Transaction volume of resale flats surged 20 per cent year on year in the third quarter, to 8,035 units as at Sep 29.
This would make Q3 one of the strongest quarters for the public housing resale market since Q3 2021, when 8,433 resale flats were transacted, said Wong Siew Ying, PropNex head of research and content.
A record number of million-dollar transactions were chalked up in Q3 with 328 deals, up from 236 in Q2 and 128 in Q1, noted Sun.
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In the first nine months of the year, 747 flats cumulatively changed hands over the million-dollar threshold. In comparison, just 469 of such sales were transacted in the whole of 2023. Huttons Asia senior director of data analytics Lee Sze Teck expects million-dollar flat sales to likely exceed 1,000 this year.
While million-dollar flats remain a small proportion of overall sales, the rest of the market is catching up. PropNex’s Wong pointed out that flats sold for more than S$600,000 now account for more than half of all transactions, from 45.7 per cent in the previous quarter.
The average price of all room types rose across the board, said Huttons’ Lee. Four-room flats had the greatest average price increase at 3.4 per cent to S$638,205, while that of five-room flats was the smallest at 1.5 per cent to S$734,488.
Overall, the average price of resale flats inched up by 2.9 per cent to S$629,856.
The Q3 jump brings price growth for the first nine months of 2024 to 6.8 per cent, outpacing that of the entire 2023 at 4.9 per cent.
Transaction volume for the year thus far stands at 22,455 units – 11.2 per cent higher than the 20,188 units resold in the same period last year, said Lee.
Healthy demand, supply squeeze
HDB attributed the rise in both resale prices and volumes to “strong broad-based demand”, as well as supply tightness in the market with fewer new flats meeting the minimum occupation period (MOP) this year, compared with the previous year.
The agency emphasised that Q3’s figures reflect the market conditions prior to the lowering of the loan-to-value limit for HDB loans, from 80 per cent to 75 per cent. This was rolled out on Aug 20 to cool the resale market and encourage greater financial prudence among homebuyers.
Lee said the faster pace of price growth witnessed in the first half of the year could have generated some “fear of missing out” among some buyers in the third quarter. “As there were fewer listings in some HDB towns due to a lower number of newly MOP flats, some buyers felt the pressure to quickly buy a resale flat.”
SRI research and data analytics head Mohan Sandrasegeran saw an uptick in demand for larger flats, particularly four and five-room flats, as well as those with leases commencing from 2013 onwards, which could have pushed overall resale prices up, he said.
Eugene Lim, key executive officer at ERA, pointed out that some HDB upgraders may have been priced out of the private market in the third quarter, and consequently turned to the HDB resale market.
Caveat data for non-landed private home transactions showed that the proportion of purchasers with HDB addresses fell to 28.8 per cent in Q3, from 37.2 per cent in Q2 and 33.8 per cent in Q1.
“The lower number of condo upgraders likely means that these homebuyers defaulted to the HDB market instead, driving transactions and therefore prices,” said Lim. “This homebuyer group (also) has the capital and are willing to purchase million-dollar flats, leading to the rise in transactions.”
More private home downgraders also fulfilled their 15-month wait-out period to buy an HDB resale flat, said OrangeTee Group’s Sun.
Staying elevated
Analysts predict that resale prices and volumes are likely to stay elevated, given the strong underlying housing demand. The impact of the HDB’s latest cooling measures remains to be seen.
Some potential buyers are likely to turn to the resale market to avoid the tight resale conditions of the new Build-To-Order (BTO) Standard, Plus and Prime model, said Lim from ERA.
Demand will be firm and prices competitive for larger five-room and executive flats, as the upcoming Plus and Prime BTO flats do not include such layouts, he noted.
This could also result in resale flats near the future Prime and Plus BTO sites fetching higher prices, since they come with a shorter MOP and less stringent selling criteria, said Sun of OrangeTee.
Huttons’ Lee added that future cuts in interest rates will translate into lower borrowing costs and a higher loan quantum for buyers. “This may afford buyers the ability to look at HDB resale flats in better locations (and) prices may increase as a result in the coming months.”
Agencies expect resale volume to range between 26,000 and 30,000 units for 2024. Prices are forecast to show firm growth, though views vary from 5 per cent to up to 10 per cent.
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