HDB resale prices to rise by 3-5% between 2024 & 2025

HDB will launch 23,000 Build-To Order (BTO) apartments in 2023. The HDB plans to provide a combined total of 100,000 units from 2021-2025.

After the cooling measures of September 2021 and the rise in BTO flat supply in the market, it will be some years before the market reaches the level of sales that was seen in 2021. In 2021, more than 31 000 flats were resold.

The demand for HDB-resale flats is expected to remain above the average of 22 809 units over the past 10 years from 2013 until 2022. During the course of this year, a variety of policy changes became effective.

Some of these factors included doubling grants for resale buyers, a HDB Flats Eligibility (HFE), a letter that must be obtained before purchase and penalties for failing to select BTO flats.

In spite of the increased competition coming from the BTO, there is no expectation for a resale rate correction in 2019. Instead, we expect the supply to decrease.

HDB’s resale rates are expected to remain flat in the year ahead, with an increase of between 3 and 5 per cent forecast for 2020.

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The moderate estimates of price growth would be in line with the predicted HDB resale rate of 4 to 5 per cent for 2023. It is, however much slower compared to the 10.4 percent increase in 2020 and the 12.7% jump in 2021. Prices rose by 3.8% during the first nine months in 2023.

This year, the rise in flat-rate supply, the inflation-conscious buyers and the long-lasting impact of cooling measures has dampened the resale.

While HDB has yet to experience a fall in its resale pricing index, the number of transactions fell during the last year. Analysts expect the volume of flat resale to drop by 5 per cent in 2023 compared to the 27896 units last year.

There will be an increase in the demand for certain resale locations. Demand could increase, leading to a rise in million-dollar sales at certain locations. But some singles are likely to be diverted off the resale marketplace, because they now have the option of applying for a new flat in all locations,” said she.

Interest was greater in flats built in older estates where there were no restrictions to resell. These buyers believed that such flats would have better capital appreciation over time and were willing to buy now.

HDB plans to introduce 20,000 to 25,000 BTO flats in 2019 to stabilize the resale price market.

After 2023 the number of new flats for MOP that were a result of BTO would drop each year until it reached 8,000 flats by 2026. The Covid-19 virus caused the BTO development to be delayed.

The number of MOPs on the secondary (resale) market has been increasing steadily since 2019 and will reach 31,000 in 2026.

The release of HDB resale units from both secondary markets and BTO in 2024-2026 will have a moderated effect on prices. In 2026 and 2028, however, the resale stock will start to decrease as total resale quantity has been reduced in 2022 & 2023.

Even though the growth of resale values has slowed, the number and value of deals worth more than a million dollars have continued to climb. HDB flats selling for at least S$1million numbered 422 as of Nov 30. That’s 14 percent more than the 369 HDB transactions that set a record in 2022.

In June 2023, the resale of an adjoined flat measuring 176 square metres in Bukit Melah at a price of S$1.5 million set a record. Analysts anticipate that HDB will end the year with 460 flats worth S$1m or more. That is 25% more than what was sold last year.

The number HDB apartment units exiting their Minimum occupation Period (MOP), or the five- to 10-year period during which owners cannot sell, is used as a measure of resale. Not all owners will list their houses, but the number exiting the MOP does count towards the number available for resale.

The total number new flats that are eligible for the MOP after five years in 2023 is 15,748. That’s half of the 31,325 units from 2022. She expects MOP flats will be even smaller in 2024 at 13,093 unit.

The decreasing supply of flats in MOP will help to prop up the prices in certain locations. The stock of existing flats could shrink further as flat owners defer their plans to upgrade and may stay in their homes due to the high costs associated with a brand new home. Resale homes will continue being purchased by those who need housing immediately, given the subsidies and grants for resale.

Sembawang Sengkang Tampines Toapayoh and ToaPayoh are some of the cities where 13,093 HDB apartments will complete their MOPs. This is 61 percent of all HDB units.

HDB owners who upgrade their apartments and then sell them after they get their keys could add to the total.

The government decided in 2023 that the framework for building new public housing apartments would be redesigned due to the increasing prices of resale units. BTOs will be classified by Standard, Prime and Plus flats from the second quarter of 2024. Plus and prime flats in better locations will face a tighter resale limit, including the 10-year MOP. Subsidies may also be clawed back.

Even though the new framework is not going to affect existing properties, there are some potential buyers who may be put off because of the restrictions that apply for Plus and Premier flats near desirable locations such as town centres or MRT stations. They might decide to purchase resale property nearby.

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