Emerging trends in HDB market

Resale market ends on positive note last year as demand for resale flats soars to 6-year high with 23,099 transactions.

DEMAND for public housing may be gaining momentum after being in the doldrums for many years. The resale market ended on a more positive note last year as demand for resale flats soared to a six-year high with 23,099 transactions. According to data released by the Housing and Development Board (HDB), the HDB resale price index also declined at a more gradual pace of 0.9 per cent year-on-year in 2018 against 1.5 per cent in 2017.

The better-than-expected sales performance could partly be attributed to the Government's efforts in scaling down the number of Build-to-Order (BTO) flats launched last year, which might have resulted in more buyers considering resale flats. More deals were closed as prices of some resale flats have become more attractive. Furthermore, an increasing number of displaced en bloc owners has entered the HDB resale market in search of larger and more affordable replacement homes.

This year could be an inflexion point for the HDB resale market as emerging trends may start to reshape buyers' preference, influence pricing dynamics, and create new hotspots or market opportunities.

New market hotspots

The resale market will see a bumper supply of new build-to-order (BTO) flats reaching their five-year minimum occupation period (MOP).

Based on HDB's record of completed residential developments, an estimated 27,000 BTO flats and 3,500 Design, Build and Sell Scheme (DBSS) flats may reach their MOP this year, contributing to a new wave of eligible sellers and upgraders.

About another 50,000 flats may be crossing their MOP in 2020-2021, which is in stark contrast to the estimated 9,000 flats that reached MOP in 2013-14.

The massive supply of flats eligible for resale may lead to a shift in housing demand and impact prices at certain estates. Some areas may enjoy a pickup in marketing activities or buying interest as more flats become eligible for resale or rental after their MOP.

Looking at past trends, the number of HDB resale and rental transactions seem to have risen in tandem with the increased number of flats reaching MOP from 2013-18.

Even at town level, the number of resale applications rose by 8.2 per cent from 2017-18 in Sengkang, along with the 51.4 per cent increase in HDB flats reaching MOP for that town. Such a trend can similarly be observed across other towns like Bukit Panjang, Choa Chu Kang, Jurong West, Sembawang, Tampines and Woodlands last year.

We anticipate that buying interest may strengthen in Sengkang, Punggol, Hougang, Pasir Ris and Tampines this year.

In Sengkang and Punggol alone, more than 10,000 BTO HDB flats will reach MOP. Both towns are known for their landscaping and greenery.

The remaking of Punggol into the next digital district and the introduction of the new Singapore Institute of Technology campus will improve the market potential and investment value of flats in these areas.

As of now, the growing supply of new BTO flats in Sengkang and Punggol has not dampened prices there. The towns were the only non-mature estates that have recorded positive price growth for their four- and five-room flats last year.

Furthermore, the north-east corridor is poised to become the next enterprise district outside of Singapore's CBD (Central Business District). The new Cross Island Line will boost the attractiveness of Hougang as commuters in the north-east will now be linked to other major industrial areas in Ang Mo Kio, Loyang, Tampines and Pasir Ris and the new industrial park in Defu.

The enhanced connectivity may improve the rental potential and capital appreciation of housing along the new MRT line.

About 3,000 new BTO flats reach MOP in Tampines and Pasir Ris this year. Together with the East-West Line, three new MRT lines - the Downtown Line, Thomson-East Coast Line and Cross Island Line - will improve the overall rail connectivity in the eastern precincts. When completed, we may expect buying interest for flats in the east to increase, especially for the mature estate Tampines that is already surrounded by many amenities and good schools.

Optimism for older flats

The HDB lease decay issue remains a bugbear for older flats. Three initiatives - HIP (Home Improvement Programme), HIP II and VERS (Voluntary Early Redevelopment Scheme) have been announced to help alleviate concerns over the expiring leases of older flats.

The multibillion-dollar programme HIP II is expected to be launched in 10 years' time to cover all flats that are 60 to 70 years old for a second upgrading. VERS allows residents in selected areas to vote on whether to take up the Government's offer to buy back their flats.

Although the announcement of these schemes did not have an immediate impact on the market, demand for older flats may rise after the implementation of HIP II. Prices of older flats could even be maintained or boosted after the second upgrading programme. Some buyers may prefer these flats.

The government will be changing the Central Provident Fund (CPF) loan rules on the purchase of older flats slated for implementation this May. Buyers may be able to use more CPF to purchase flats with shorter leases.

The changes may also impact the amount of bank loan extended to these buyers as some banks take reference from the CPF restrictions. The new rules may enhance the attractiveness of older flats as buyers are now better able to finance their purchases. These changes may also help the younger generation stay near their parents who may be living in mature estates.

Currently, some older flats in mature estates are transacting significantly lower than their peak values in 2013. For instance, three-room standard resale flats (above 40 years old) in Toa Payoh and Bukit Merah last year went for 25.5 per cent and 23.1 per cent less than their peak prices. The price gap is much larger than similar flat types sold in Queenstown and Geylang last year - at 9.6 per cent and 14.8 per cent below their peak prices.

Older flats may also currently be deemed more attractive in light of the widening price gap between older and newer flats. Some buyers looking at entry-level private properties may also consider older flats as the latter are less affected by the latest cooling measures and loan restrictions.

Opportunistic buyers may now consider scooping a value buy before the upgrading programmes are implemented, as prices may start inching up again.

Many premium flat choices

With more than 70,000 flats crossing their MOP period between 2019 and 2021, a slew of choice flats will be available for resale, including DBSS, centrally-located and waterfront facing units.

As many as 4,000 BTO flats in prime locations like Queenstown, Bukit Merah and Ang Mo Kio, and another 3,500 DBSS units could be reaching MOP this year. These include The Trivelis (DBSS), Belvia (DBSS), Centrale 8 (DBSS), Parkland Residences (DBSS) and Lake Vista (DBSS), Skyterrace@Dawson, Skyville@Dawson and Yio Chu Kang Vista.

It must be noted that MOPs may spill over to 2020 for some blocks or projects as not all units are completed at the same time, and the completion dates by exact units/blocks/ projects are not publicly available.

However, flat hunters considering some of these newer, centrally located flats with fresher leases may need to pay more. A growing proportion of flats are transacting at S$700,000 and above in recent years.

According to statistics from data.gov.sg, almost 2,000 flats or about 8.5 per cent of all HDB resale flats went for at least S$700,000 in 2018. About half of these flats were below 20 years old and slightly below half were non-standard flats like DBSS, premium apartments, maisonettes, apartments or flats at Pinnacle@Duxton.

The increasing number of flats being sold at higher prices indicates that selected market segments or flat models continue to do well despite the general price weakness seen for the overall HDB resale market.

Given that many displaced en bloc owners have had a windfall from the collective sales of their homes and starting salaries are getting higher for young graduates, more buyers may be willing to pay a premium for choice flats, such as those that are centrally located or possess distinctive features like sky gardens, landscaped sky terraces, paranomic views of the city and/or waterfront living.


Demand for HDB resale flats may continue to be resilient this year, maintaining at around 22,000 to 24,000 units. Price weakness may continue to affect certain segments due to the growing supply of flats and concerns over ageing leases. Overall resale prices may slide marginally by 1 to 2 per cent this year.

  • Christine Sun is the head at OrangeTee & Tie Research & Consultancy. John Tay is an analyst at OrangeTee & Tie Research & Consultancy.

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes