Continuing the trend of moderate price growth for resale flats, the latest HDB quarterly transaction data indicates a modest uptick in prices for 2Q 2024, with the Resale Price Index rising to 187.6. This is a 2.3% increase from the previous quarter, and a 6.6% from the same period in the previous year.”
Similarly, the volume of resale HDB flat transactions showed upwards movement, reaching 7,352 units in 2Q 2024. This is 4.0% higher than in 1Q2024, and 12.9% higher compared to the same period last year. This is also the highest number of HDB resale transactions since 4Q 2021.
The increase in resale prices and volume could be attributed to a strong demand for HDB flats, as well as supply tightness with fewer new flats meeting the Minimum Occupation Period (MOP) this year.
More buyers could also be turning towards the resale HDB market in response to strong headwinds. These include cooling measures, slower economic sentiment, higher-for-longer interest rates, and higher private housing prices in the Outside Central Region (OCR) that make resale HDB flats a more attractive value proposition.
Chart 1: HDB Resale Index vs Number of Transactions
Source: HDB, ERA Research and Market Intelligence as of 26 July 2024
Transactions in Mature Estates
2Q 2024 saw 2,777 resale transactions in mature estates. This marks a 18.8% increase y-o-y. As future BTO homes in these estates are likely to fall under the Plus or Prime category, buyers might have chosen to enter the resale market instead.
A reason for this could be that existing resale flats are not subject to the more stringent resale conditions placed on the future Plus or Prime flats, such as a 10-year Minimum Occupation Period or resale subsidy clawback.
High-value ($1m and above) transactions
Likewise, with the initial batch of private property sellers exiting the 15-month wait-out period in January this year, this may have spurred greater demand in the resale HDB flat market. Coupled with the aforementioned supply constraints for MOP flats, this factor likely contributed to an upturn in the number of HDB flats sold with a million-dollar price tag.
In 2Q 2024, 236 million-dollar flats were sold, bringing the total number of million-dollar HDB flat transactions in 1H 2024 to 419. However, this made up only 3.2% of total HDB resale transactions
Chart 2: HDB transactions by flat type (for transactions $1m and above)
Source: HDB, ERA Research and Market Intelligence as of 26 July 2024
An increase in the number of high-value HDB transactions in the quarter can be attributed to homebuyers’ preference for larger homes in good locations near the city centre, or MRT stations.
We observed that buyers with the purchasing power to buy a private property are instead turning to the HDB resale market as they prioritise factors such as unit size, location and pricing.
Upcoming BTO launch could help alleviate demand
The June BTO launch that recently concluded saw an application rate of 3.1, the highest since May 2023. With 24,179 applicants participating in the exercise (the highest since November 2022), we can possibly see less demand for resale flats in the upcoming quarter as these participants wait out for the results.
In the government’s active efforts to create affordable and diverse housing options for all, we will see the launch of 14 new Build-To-Order (BTO) projects in October, consisting of 8,500 units. This will be the first BTO launch that will include the new classification of Standard, Plus, and Prime flats.
For example, this launch would include homes in mature estates and prime areas, such as the three project offerings in Kallang/Whampoa – an area known for high resale transaction prices. By offering homes in such areas with a fresh 99-year lease, this could alleviate demand in this area.
What can we expect in 2H 2024?
In the 1H 2024, a total of 13,419 resale transactions were recorded. This shows that the HDB resale market is on track to reach 26,000 to 27,000 HDB resale transactions in 2024, as ERA previously projected.
The BTO launches in June and October are set to fulfil HDB’s commitment of 19,600 flats in 2024. Coupled with the re-classification of BTO flats, this should alleviate some demand on the HDB resale market, further moderating HDB prices in the mid-term.
The October 2024 BTO launch will see 8,500 projects launched across eight towns. This launch should attract considerable interest from homebuyers as it includes two projects in the new Bayshore precinct, as well as three projects in Kallang/Whampoa – a highly sought-after location for HDB homebuyers.
The upcoming BTO launch will do away with the classification of mature and non-mature estates. This will allow singles to apply for 2-room flats island-wide, as they are no longer restricted to only buying houses in non-mature estates.
“Therefore, we could see higher application rates for 2-room flats by singles in the next exercise given the freedom to choose where they would like to live.
We can still expect strong demand and competitive prices for larger flats, such as 5-room and Executive flats. As the upcoming Plus and Prime BTO flats do not include 5-room or larger layouts, demand will still remain for larger units in choicer areas.
In the 1H 2024, a total of 13,419 resale transactions were recorded. This shows that the HDB resale market is on track to achieve a 3-5% price growth, and to reach 26,000 to 27,000 HDB resale transactions in 2024, as ERA previously projected.
