Are rising HDB prices the new normal?

Demand for public housing is unlikely to evaporate even during economic recessions.

THE Covid-19 pandemic brought severe disruptions to various industries in Singapore and caused the economy to contract 5.4 per cent in 2020, which was one of the worst recessions since independence.

However, the public housing resale market sailed through 2020 relatively unscathed by the recession. Last year, the HDB resale price index increased 5 per cent year-on-year (yoy) while the number of resale transactions rose 4.4 per cent yoy to 24,748 flats.

This was not the first time that the HDB resale prices were unaffected by an economic recession.


In the past 30 years, the Singapore economy suffered four recessions, which is defined as at least two consecutive quarters of contraction in quarterly real gross domestic product (GDP). In the past four recessions, the HDB resale price index declined during two of the four recessions, which were the recessions caused by the Asian financial crisis in 1998 and the 2001 recession.

The public housing prices appreciated in the other two recessions, which were caused by the global financial crisis in 2008 and Covid-19 pandemic in 2020.

One of the reasons for the resilience of the public housing market is it is a basic necessity and the most affordable type of housing in Singapore. Therefore, the demand for public housing is unlikely to evaporate even during economic recessions.

On top of that, some private homeowners may even downgrade to public housing when they are affected by financial hardship during economic downturns.

Another reason lies in the regulations and restrictions governing the ownership and trading of HDB flats. If an individual can own several units of a certain asset which could be easily traded with minimal restrictions and transaction costs, the price of that asset is likely to fluctuate widely during market booms and bust. An example of such asset would be securities listed on a stock exchange.

The ownership and transaction of HDB flats are regulated. Only Singaporeans and permanent residents can own HDB flats. Each resident household can own only one HDB flat, which will be their primary place of residence. Each flat owner must live in his flat for a minimum of five years before he can sell the flat.

There are other rules and regulations to ensure that HDB flats are treated as a home rather than a trading asset, which contribute to its price stability.

The third reason is that the government can exercise a relatively high degree of influence over the public housing market compared to the private housing market. The government holds the monopoly over the HDB primary market as it controls the supply and prices of new HDB flats.

The government can also influence the resale market through regulations, policies and subsidies.

However, the degree of its influence over the HDB resale prices and demand is affected by the speed of the impact of the policies as they are filtered through the housing market.

The HDB resale price index even outperformed the private housing price index last year. In 2020, private residential property prices grew 2.2 per cent year-on-year (yoy), which was only half the growth rate of HDB resale prices.

The HDB resale price index has been expanding steadily since Q3 2019, only pausing temporarily in Q1 2020 when the index remained unchanged from the previous quarter. In the last quarter of 2020, the growth in the HDB resale price index accelerated to 3.1 per cent quarter-on-quarter (qoq).

This was the highest quarterly rate of price growth since Q3 2011 when the HDB resale price index grew by 3.8 per cent quarterly.

A total of 24,748 HDB resale flats exchanged hands in 2020, 4.4 per cent more than the annual transaction volume in 2019. Despite the ongoing pandemic, HDB resale transaction volume in 2020 was still 13.5 per cent higher than the annual average of the previous five years from 2015 to 2019.

Among the various HDB towns in Singapore, the largest increase in the number of HDB resale flats transacted in 2020 occurred in Punggol, where the resale volume increased 50.9 per cent yoy to 1,750 flats.

This is followed by Pasir Ris and Hougang with 45.1 per cent and 29.3 per cent yoy growth in resale transactions respectively.


From 2011 to 2014, the government drastically increased the supply of new Build-to-Order (BTO) HDB flats in response to the strong housing demand. These flats were constructed within three to four years.

As a result, the number of HDB flats that reached the end of their five-year Minimum Occupation Period (MOP) and could potentially be sold in the resale market increased sharply in 2019 and 2020. The robust supply of such new flats is expected to continue to 2022.

In 2019, there were 29,678 HDB resale flats that had reached the end of their 5-year MOP. Last year, another 24,513 new HDB flats became eligible for resale, almost double the annual five-year average of 12,575 newly eligible flats from 2014 to 2018.

In this report, a "young flat" is defined as a HDB resale flat that is between five and 10 years old. The remaining lease of a young flat is at least 89 years. The young flats could be one of the driving forces behind the rising HDB resale prices in 2020 as they are newer and have longer remaining leases compared to older flats.

Furthermore, some of these newer flats have more modern designs that are integrated with shops, car parks and recreational facilities. As a result, the young flats could fetch higher resale prices.

In 2020, a total of 6,493 of such flats were sold, which was 40.7 per cent higher than the number of young flats sold in 2019.

In addition, the young flats are also expanding their market share. In 2019, 19.5 per cent of transacted HDB resale flats were young flats. That number increased to 26.2 per cent of the total number of HDB flats sold in 2020.

Half of the total number of transacted young flats were located in three HDB towns - Punggol, Sengkang and Yishun. Punggol has the highest number of young resale flats sold in 2020 at 1,358 flats, or 20.9 per cent of the total number of young flats transacted islandwide.

This was because the Punggol HDB estate had the largest number flats reaching the end of their five-year MOP last year. In 2020, 6,839 flats in Punggol reached the end of the MOP, which was 27.8 per cent of the total number of newly-MOP flats.

This was followed by Sengkang with 4,430 5-year old flats and Choa Chu Kang with 2,797 of such flats.


In recent years, a growing number of HDB resale flats were transacted at eye-watering prices of S$1 million or more. In July 2012, a 150 sq m executive flat was the first public housing flat to be sold for S$1 million. In that year, only two HDB resale flats were transacted at S$1 million or more.

In 2020, a record number of 82 HDB resale flats exchanged hands at S$1 million or more, which was 28.1 per cent more than the number of million-dollar flats sold in 2019. Eighty-two per cent, or 67 of the 82 million-dollar flats, transacted in 2020 were 10 years old or younger.

The majority of these million-dollar flats are located in the Central Area, Queenstown, Bukit Merah and Bishan. The increase in the number of million-dollar flats was due to several HDB projects located in city fringe areas that reached their five-year MOP and were released into the resale market in 2020.

These projects include SkyVille @ Dawson, Sky Terrace @ Dawson and Boon Tiong Arcadia. Buyers are willing to pay a premium for these flats due to the retail amenities nearby and the close proximity to Central Business District.


The pandemic caused an unexpected boost for the HDB resale market. When the coronavirus swept through workers' dormitories last year, construction activities came to a halt for months. Although the construction at some HDB BTO projects have resumed, the completion dates are still expected to be delayed.

As a result, some homebuyers turned to the HDB resale market, leading to an increase in the demand and prices of resale flats.

Moreover, the housing grants that were announced by the government in September 2019 are still in place. Together with other housing grants, eligible buyers could receive up to S$160,000 in grants for resale flats. Therefore, the demand for resale flats could be cushioned from the impact of the pandemic by such government assistance.

In the past few months, the demand for HDB resale flats were so robust that some agents claimed that some HDB flats were sold within one to two months after they were put up for sale.


The outlook for the HDB resale market remains bright in the near future as the positive factors outweigh the negative ones.

Singapore has the capacity and capability to vaccinate the entire population by the third quarter of 2021. As at March 8, 2021, there were 392,620 people that have already received their first dose of the Covid-19 vaccine.

The vaccinations are expected to aid the economic recovery, especially for sectors that were badly affected by the pandemic. When the employment market and wage levels improve, they will provide a shot in the arm for the public housing market.

Although 26,000 HDB flats will reach the end of their MOP this year, and this will be followed by another 35,000 flats in 2022, the transactions of these new flats could boost the average HDB resale prices. There is hardly any risk of a glut as not all of these new flats would be offered for sale.

Therefore, in the absence of any government intervention, the prices and transaction volume of HDB resale flats would continue to head north this year.

  • Nicholas Mak is head of the research & consultancy department at ERA Singapore, and Nguyen Thu Ha is research and consultancy analyst at ERA


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