New data from the Housing and Development Board (HDB) has shown a slight slowdown in resale flat prices in the last quarter of 2024. The flash estimates, released on Jan 2, revealed that the prices of HDB resale flats rose by 2.5% quarter-on-quarter (q-o-q), compared to the 2.7% q-o-q growth recorded in the previous quarter. It marks the 19th consecutive quarter that the HDB resale market has experienced price increases. Despite the increase, the pace of growth has slowed down compared to previous quarters.
According to Christine Sun, chief researcher and strategist at OrangeTee Group, the slower growth in the last quarter could be attributed to factors such as the launch of over 8,500 new flats by HDB in the October Build-to-Order (BTO) exercise. These flats, with desirable features like scenic views and close proximity to MRT stations, diverted demand away from the resale market, leading to a decrease in resale transactions. Additionally, the seasonal year-end school holidays, when many Singaporeans tend to travel abroad, also saw a slowdown in house viewings and sales activities.
However, while the 4Q2024 price growth may have slightly slowed down, the flash estimates showed that prices still grew by 9.6% for the entire year, which is double the 4.9% growth recorded in 2023. However, it was still slower than the price growth of 10.4% in 2022 and 12.7% in 2021. Sun notes that this could be due to the government intervention in August 2024, when the loan-to-value (LTV) limit for HDB loans was reduced by five percentage points to 75%. As a result, this measure could have worked its way into the market, causing a slight drag on resale prices and volume.
Data from data.gov.sg also supports the idea of a moderate price growth for some flat types. For example, the median price of four-room flats saw a q-o-q increase of 2.5% in 4Q2024, which is slower than the 3.4% growth seen in 3Q2024. Similarly, two-room flats saw a q-o-q increase of 2% in 4Q2024, compared to the 3.9% growth seen in 3Q2024. Meanwhile, executive flats saw a q-o-q price increase of 1.2% in 4Q2024, which is slightly less than the 1.7% growth seen in the previous quarter. However, prices for five-room flats grew 3.2% in 4Q2024, which is faster than the 1.2% increase seen in 3Q2024.
Despite the slight slowdown in the pace of price growth, the HDB resale market still saw a total of 28,876 units being transacted in 2024, which is an 8% increase from the 26,735 units recorded in 2023. However, this is still lower than the peak of 31,017 units seen in 2021.
Sun notes that the decline in resale transactions in 4Q2024 was primarily due to the launch of the new BTO flats in the October BTO exercise, which were located in desirable locations. As a result, some potential buyers diverted their attention to the BTO market instead. Additionally, with fewer homebuyers and sellers during the seasonal year-end school holidays, this could have also contributed to the decline in sales activities.
However, despite the slowdown in resale transactions, the total number of million-dollar transactions reached a record high of 1,033 units in 2024, which is more than double the 469 units recorded in 2023. This could be due to the new classification of “Plus” and “Prime” classification BTO flats, which attracted more homebuyers to seek out HDB resale homes in central locations.
Toa Payoh town saw the most million-dollar flat transactions in 4Q2024, with 58 such transactions. Of the 58 transactions, 20 were for four- and five-room units at Alkaff Vista in Bidadari Park Drive, which recently reached the five-year minimum occupation period (MOP).
Eugene Lim, key executive officer of ERA Singapore, notes that buyers are increasingly turning towards the resale market, as they are unwilling to accept the resale restrictions that come with newer flats, such as the 10-year MOP, rental restrictions after MOP, subsidy clawback upon resale, and resale income cap on future buyers.
When investing in a Singapore Condo, securing adequate financing is crucial. While there are various mortgage options available in Singapore, it is vital to understand the Total Debt Servicing Ratio (TDSR) framework. This framework sets a limit on the amount of loan a borrower can take, taking into consideration their income and existing debt obligations. To ensure wise financial decision-making and prevent over-leveraging, investors should seek the assistance of financial advisors or mortgage brokers who can provide guidance on navigating the TDSR.
Looking ahead, Sun predicts that HDB resale prices will continue to rise in 2025, but at a slower rate than in previous years. This is because many areas in Singapore have already reached new price highs, leading to affordability concerns for potential buyers. Furthermore, the ongoing supply of BTO flats is expected to help moderate the price growth in the secondary market. However, the extent of price stabilisation will depend on the number of BTO flats that the government plans to release in the upcoming years.
In February 2025, HDB will launch its largest sale of balance flats (SBF) exercise, offering over 5,500 flats across various towns, notes Lee Sze Teck, senior director of data analytics at Huttons Asia. As there is currently no upfront information on BTO projects with shorter waiting times, some prospective buyers may decide to wait and see before making a decision. Interest rates could also potentially dip lower in 2025, allowing buyers to take on a larger loan amount and potentially looking for an executive condo (EC) or resale condo instead. With this in mind, Huttons projects that HDB resale flat prices may grow by 5-8% in 2025, with an estimated resale volume of 26,000-28,000 units by the end of the year.…