Larger flats and million-dollar transactions drive HDB resale flats momentum

HDB resale prices increased by 0.3% in MoM and 6.2% YoY in March.

The HDB resale market in Singapore was driven by a surge in demand for larger flats and an increased number of million-dollar property transactions, according to experts.

The latest report from 99 and SRX showed that HDB resale prices continued their upward trend for the sixth consecutive month in March, with a 0.3% MoM increase. YoY, HDB resale prices saw a rise of 6.2%. However, prices for executive flats and 3-room flats experienced slight declines of 0.5% and 0.1% respectively compared to the previous month.

HDB resale volume also dropped for the second consecutive month, decreasing by 3.3% to 2,063 units compared to the previous month. YoY, resale volume was 9.8% lower than in March 2023, with non-mature estates accounting for approximately 60% of transactions.

According to Mark Yip, CEO of Huttons Asia, the HDB resale market was primarily driven by the demand for larger flats and the increased number of million-dollar transactions.

He noted a significant uptick in the sale of 5-room and larger flats, possibly fueled by ex-private property owners entering the market after the 15-month wait-out period.

Additionally, there was a 22% increase in million-dollar flat transactions compared to February 2024. Toa Payoh emerged as a hotspot, with Toa Payoh Crest recording the highest number of million-dollar flat sales due to its strategic location and amenities.

"The stronger demand for larger flats and the higher number of million-dollar flat transactions pushed up prices of HDB resale flats by 0.3% in March 2024," Yip stated.

However, four HDB towns, namely Choa Chu Kang, Jurong West, Sembawang, and Sengkang, have yet to see a million-dollar flat transaction. Sengkang, in particular, is nearing this milestone, with prices reaching $968,000 in March 2024.

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OrangeTee further noted that 5 Room flats saw prices rise by 1% during the past month, whilst the number of flats sold for over a million dollars increased from 50 to 61 units between February and March. Despite the higher cost, transactions in mature estates accounted for 40.1% of total transactions, indicating a growing demand for upscale HDB resale flats.

"These trends suggest that there is an increased demand for pricier HDB resale flats. This may be due to more private homeowners who are looking to downgrade to HDB resale flats," it said.

"These buyers typically have the financial means to pay more for these flats, and more have completed their 15-month wait-out period this year," it added.

Experts also suggested that the sharp price rise may have dampened sales momentum, diverting some demand to the primary market. Additionally, the increase in BTO and sale of balance flats last month, coupled with fewer flats reaching their five-year minimum occupation period (MOP) compared to the previous year, may have contributed to the reduced availability of resale units.

According to Wong Siew Ying, head of research and content at PropNex, the proportion of resale flats with remaining leases of 90 years or more edged up to 26.8% in March from 26.4% in February.

"As newer flats tend to fetch higher prices, it is possible that they have helped to support overall resale prices," Ying said.

She noted that several transactions occurred at HDB projects recently exiting the MOP, including St. George Tower in Kallang Whampoa, West Edge @ Bukit Batok, and Tampines GreenRidges.

Ying said that, of the 61 million-dollar flats sold, nine units were in non-mature towns, including Bukit Panjang, Yishun, Jurong East, and six executive flats in Hougang—a record for the area. In mature towns, Toa Payoh led with nine units sold for at least $1m, followed by Kallang Whampoa, Bukit Merah, and Clementi with seven units each. The remaining million-dollar transactions occurred in various towns across Singapore, with 5-room flats comprising the majority.

The priciest resale flat in March was a 112-square-meter 5 Room unit in Boon Tiong Road, fetching $1.45m. This unit, situated between the 19th and 21st storey, had a remaining lease of 90 years and 11 months.

Looking ahead, Yip predicted an increase in HDB resale market transactions, with potential buyers from the recent sale of balance flats turning to the resale market. He also anticipated more mass market launches throughout 2024, potentially prompting HDB upgraders to sell their flats to avoid additional buyer's stamp duty.

The expert estimated the HDB resale market volume to range between 25,000 to 27,000 flats, with prices expected to stabilise between 3% to 5% throughout 2024.

Wong, for her part, said that the number of million-dollar transactions will remain high in April, citing that data retrieved on 8 April showed 16 resale flats sold for at least $1m in various locations across Singapore.

Meanwhile, OrangeTee said that with the dwindling number of MOP flats in 2024, overall sales are expected to remain moderate. However, the reduced number of BTO launches may prompt buyers in immediate need of housing to turn to the resale market.