Great Demand And Strong Competition For HDB Flats In Bedok Despite Covid-19 Situation
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On January 2, the Housing and Development Board (HDB) released their flash estimates, which indicated a 2.5% increase in resale flat prices in the fourth quarter of 2024. This shows a slight deceleration from the 2.7% growth seen in the previous quarter, marking the 19th consecutive quarter of price increases in the HDB resale segment.
According to Christine Sun, the chief researcher and strategist at OrangeTee Group, the flash estimates also showed that HDB resale prices experienced a 9.6% growth in 2024. While this is double the 4.9% growth seen in 2023, it is still slower compared to the 10.4% increase in 2022 and the 12.7% growth in 2021.
OrangeTee also noted that there was a slowdown in the price growth of certain flat types, based on the HDB caveat data from data.gov.sg as of January 2 at 8:15am. For instance, the median price of four-room flats saw a 2.5% increase in the fourth quarter of 2024, slower than the 3.4% growth in the third quarter of the same year.
Similarly, two-room flats saw a 2% increase in the fourth quarter of 2024, slower than the 3.9% growth in the third quarter. Executive flats also experienced a slower growth rate of 1.2% in the fourth quarter, compared to 1.7% in the previous quarter. However, prices for five-room flats saw a faster growth rate of 3.2% in the fourth quarter, compared to a 1.2% increase in the third quarter.
In terms of resale volume, there was a 3.6% decline year-on-year in the fourth quarter of 2024, with 6,314 units sold compared to 6,547 units in the same period in 2023. This also represents a 22.5% decrease quarter-on-quarter from 8,142 units in the third quarter of 2024.
Sun attributes this decline in resale transactions to HDB launching over 8,500 new flats in their October Build-to-Order (BTO) exercise, many of which were located in prime and desirable locations. She also notes that the seasonal year-end school holidays, which often see a decrease in house viewings and sales activities, may have contributed to the decline.
However, Wong Siew Ying, the head of research and content at PropNex, believes that the slower growth in the fourth quarter of 2024 is a result of government intervention in August 2024. During this time, the loan-to-value (LTV) limit for HDB loans was reduced by 5 percentage points to 75%. Wong believes that these measures are starting to have an effect on the market and that the decrease in resale volume may have also put a drag on prices.
In total, there were 28,876 resale transactions in 2024, a 8% increase from the 26,735 units sold in 2023 and a 7.7% increase from the 27,896 units sold in 2022. However, this is still lower than the peak of 31,017 units sold in 2021.
There was also a decline in million-dollar flat transactions in the fourth quarter of 2024, with only 283 units sold compared to 331 units in the third quarter. Nonetheless, the total number of million-dollar transactions reached a record high of 1,033 units in 2024, more than double the 469 transactions seen in 2023.
According to OrangeTee’s Sun, Toa Payoh town had the most million-dollar flat transactions in the fourth quarter of 2024, with 58 units sold. This includes 20 transactions for four- and five-room units at Alkaff Vista in Bidadari Park Drive, which recently met the five-year minimum occupation period (MOP).
Eugene Lim, the key executive officer of ERA Singapore, suggests that the new Plus and Prime classification for BTO flats may have driven more buyers to seek out HDB resale homes in central locations. These buyers may be unwilling to accept the resale restrictions, such as a 10-year MOP, rental restrictions after MOP, subsidy clawback upon resale, and a resale income cap for future buyers.
OrangeTee predicts that HDB resale prices will continue to rise in 2025, but at a slower pace than in previous years. According to Sun, prices have already reached new highs in many areas, causing affordability concerns for potential buyers. She also believes that the ongoing supply of BTO flats will help moderate price growth in the secondary market, but the extent of this will depend on the number of BTO flats released in the coming years.
HDB’s largest sale of balance flats (SBF) exercise, which will offer more than 5,500 units across various towns, is set to take place in February 2025. Lee Sze Teck, the senior director of data analytics at Huttons Asia, believes that this may divert some buyers from the resale market. He also believes that the lower upfront information on BTO projects with shorter waiting times may drive more buyers to the resale market.
Lee also notes that interest rates may decrease in 2025, allowing buyers to take on higher loan amounts to buy new homes. He suggests that some buyers may instead set their sights on executive condos or resale condos, causing the million-dollar flat market to stabilize at around 900 to 1,200 units in 2025.
In terms of projections, Lim expects resale prices to grow at a more moderate pace of 3% to 6% in 2025, with 26,000 to 27,000 resale units sold by the end of the year. PropNex predicts a 5% to 7% increase in resale flat prices in 2025, with a forecasted resale volume of 29,000 to 30,000 units.
Huttons expects HDB resale flat prices to grow at a slower pace of 5% to 8% in 2025, with a likely resale volume of 26,000 to 28,000 units. They also note that the supply of BTO flats in 2025 will be 12% lower than 2024, which may drive more buyers to the resale market.