HDB resale flat prices up 1.3% q-o-q in 3Q2023, slower growth than previous quarter

/ EdgeProp Singapore |

October 27, 2023 11:50 AM SGT

Resale flat prices rose 1.3% q-o-q in 3Q2023 according to data released by HDB on Oct 27 (Picture: Samuel Isaac Chua/ The Edge Singapore)

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SINGAPORE (EDGEPROP) - Resale flat prices rose 1.3% q-o-q in 3Q2023 according to data released by HDB on Oct 27. This is marginally higher than the 1.2% q-o-q growth indicated in the flash estimates released earlier this month and confirms a 14th consecutive quarterly increase in resale flat price.

Nonetheless, the growth is lower than the 1.5% q-o-q increase recorded in 2Q2023. It is also lower than the average quarterly price growth of 2.5% registered in 2022. “We are seeing some moderation in the rate of increase in resale prices since the government’s implementation of a strong pipeline of supply, as well as the cooling measures to promote a stable and sustainable property market,” HDB states in a press release announcing the 3Q2023 data.

The measures include a wait-out period of 15 months before private property owners are allowed to purchase a non-subsidies HDB resale flat, as well as the lowering of the Loan-to-Value limit for HDB housing loans from 90% to 85%, and further to 80%.

Year-to-date, resale flat prices have risen 3.8%, significantly lower than the 8% and 9.1% growth seen over the same period in 2022 and 2021 respectively. “The trends indicate that the cooling measures and the increased housing supply are effective in taming the price hikes,” observes Christine Sun, senior vice president of research & analytics at OrangeTee & Tie.

Resale volume up q-o-q, but lower y-o-y

The ease in resale flat price growth comes despite an increase in transacted volume. In 3Q2023, 6,695 flats changed hands, up 2.8% q-o-q. However, the figure is 11.3% lower compared to the same period last year. This is also the lowest third quarter resale volume recorded since 2020.

Lee Sze Teck, senior director of data analytics at Huttons Asia, attributes the lower volume to uncertainties in the market coming off the back of economic headwinds, repeated delays to Build-to-Order (BTO) launches and news on potential changes to housing policies. “Some buyers decided to sit on the fence awaiting more clarity in the market before committing. There were some buyers who erred on the side of caution in view of the economic uncertainties and high-for-longer interest rates,” he explains.

OrangeTee & Tie’s Sun highlights that the proportion of sales by flat type has also changed compared to a year ago, with sales of five-room flats declining from 25.4% in 3Q2022 to 22.9% in 3Q2023. Similarly, the proportion of executive flats sold dipped from 7.3% in 3Q2022 to 5.8% in 3Q2023. “The trends indicate that demand for bigger flats was probably affected by the 15-month wait-out period imposed on private homeowners purchasing HDB resale flats,” she opines.

In contrast, demand for four-room flats grew, with the proportion of sales for this flat type edging up from 41.7% in 3Q2022 to 43.8% in 3Q2023. Eugene Lim, key executive officer at ERA Singapore, says four-room flats’ relative affordability underpins the resilient demand for this unit type compared to larger flats. “Furthermore, seniors above 55 years old will not need to wait out for 15 months if they choose to buy a 4-room flat after downsizing from their private property,” he adds.

Meanwhile, rental volume in the HDB market edged up 0.1% q-o-q in 3Q2023 to 9,852 approved applications, which is also 20.3% higher y-o-y. As at the end of 3Q2023, there were 57,797 HDB flats rented out, an increase of 1.7% over the previous quarter.

Resilient demand for flats in mature estates

Sengkang topped the list of HDB towns with the most resale flat transactions, with over 500 flats changing hands. Other towns in the top five include Punggol, Woodlands, Yishun and Jurong West. Together, resale transactions in these towns accounted for around 35.7% of total transactions in 3Q2023, says Huttons’ Lee.

Top five most popular HDB Towns among buyers in 3Q2023

Source: HDB, Huttons Data Analytics as of Oct 27, 2023

Nonetheless, Lee points out that buyers are willing to pay more for a flat in a mature estate that will not face restrictions on resale, ahead of the change in HDB’s housing classification system. From 2H2024, BTO units will be segregated as Standard, Plus or Prime flats, replacing the previous system that classified housing estates as mature and non-mature. Plus and Prime flats will come with more subsidies, in addition to tighter restrictions such as a longer minimum occupation period of 10 years and limitations for renting out the property.

ERA’s Lim concurs. “Buyer demand for flats within mature estates is still going strong, even as fewer sellers put their flats up for sale in these areas. Prime units that go on sale are sold quickly and could sometimes reach record selling prices,” he says.

In 3Q2023, resale flats in Bukit Timah saw the steepest price gain of 38.1%, followed by Serangoon (10.8%) and Bishan (7.2%).

The demand for resale flats in mature rates coincides with more million-dollar flat transactions in 3Q2023. The past quarter saw 128 flats sold for at least $1 million, based on statistics on data.gov.sg. This is 21.9% higher than the previous quarter. “It is highly likely that the number of million-dollar flats will exceed 400 and account for around 1.6% of total transactions in 2023,” observes Lee.

Location of million-dollar flats in 3Q2023

Source: HDB, Huttons Data Analytics as of Oct 27, 2023

Prices, volume to moderate

HDB has launched some 16,700 flats to date this year and says it remains on track to launch up to 23,000 flats in 2023. In December it will offer about 6,000 BTO flats in estates including Bukit Panjang, Jurong West, Woodlands, Bedok, Bishan, Bukit Merah and Queenstown.

OrangeTee & Tie’s Sun believes some demand will be diverted from the resale market to the BTO market in light of the upcoming launch, especially as it includes some “plum sites” in the city fringe or within walking distance of an MRT station. In addition, the increase in Additional Buyer’s Stamp Duty has raised the upgrading hurdle for some families, which may lead to fewer upgraders and thus less housing stock available for sale, though this may be offset by the completion of new condos this year which will prompt existing HDB upgraders to sell their flats. “The interplay of these effects may see resale volume dipping slightly to about 26,000 to 27,000 units this year, compared to 27,896 units in 2022,” says Sun.

In terms of prices, Sun anticipates full-year resale flat price growth to clock in between 4% to 5.5%, lower than the 10.4% growth recorded in 2022 and the 12.7% growth seen in 2021.

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