HDB resale prices rise 4.9% in 2023, smallest increase since 2019

SINGAPORE: Prices of Housing Board resale flats rose by 4.9 per cent in 2023, a significantly smaller increase compared with the 10.4 per cent price gain in the previous year and the 12.7 per cent growth in 2021.

It also marks the slowest year-on-year increase since 2019 when prices grew by 0.1 per cent.

The full-year figure comes as data released by the Housing and Development (HDB) on Friday (Jan 26) showed that for the fourth quarter of 2023, resale prices rose by 1.1 per cent, lower than the 1.3 per cent growth in the previous quarter.

While some analysts attributed the fourth-quarter figure to the year-end lull, they noted other factors such as the timing of Build-to-Order (BTO) launches in October and December which may have prompted buyers to consider new flats instead.

"The timing of these BTO launches appeared to have a notable impact, capturing the attention of many potential home owners.

"These potential home owners were possibly swayed by the appeal of brand-new flats, (and) might have redirected their interest away from the resale market to explore these newly launched BTO options," said Mr Mohan Sandrasegeran, head of research and data analytics at Singapore Realtors Inc.

IMPACT OF COOLING MEASURES

Others noted the impact of cooling measures on the demand for resale flats over the months.

In September 2022, the government introduced a slew of measures that included a 15-month wait-out period for private home owners who want to buy HDB resale flats. 

Stricter borrowing criteria and tighter limits for HDB loans were also introduced to ensure prudent borrowing amid rising interest rates.

"The 1.1 per cent quarter-on-quarter (increase) remained below the average quarterly increase of 2.5 per cent observed in 2022 and around 3.1 per cent in 2021, indicating a moderation in HDB resale prices since the implementation of cooling measures in September 2022 and April 2023," said ERA Singapore's key executive officer Eugene Lim.

Besides a contraction in housing demand, OrangeTee & Tie's chief researcher and strategist Christine Sun also cited inflationary concerns and higher interest rates as reasons for the slower growth in prices in 2023.

Ms Sun noted that average prices fell in 12 towns in the fourth quarter, compared with 10 towns in the previous quarter.

"On the other hand, average prices in Q4 grew in 14 towns, which is down from 16 towns in Q3," she added.

MILLION-DOLLAR FLATS

Despite the smaller fourth-quarter increase in prices, it was still the 15th consecutive quarter of growth.

According to PropertyGuru’s country manager Tan Tee Khoon, 470 million-dollar flats changed hands in 2023 - a new high - of which 134 were in the fourth quarter.

"However, it’s important to note that these flats still represent a small fraction of the market, accounting for just 2.1 per cent of all transactions as of Q4 2023," he added.

The top three HDB towns with the greatest number of million-dollar flats in 2023 were Bukit Merah, Toa Payoh and Kallang/Whampoa, said Huttons Asia's senior director of data analytics Lee Sze Teck.

“More well-heeled property seekers are turning to larger HDB flats in prime districts. This shift in buying preference could be influenced by factors including affordability, size, and location of these HDB units compared to private properties,” said PropertyGuru’s Dr Tan.

2024 OUTLOOK 

Analysts said there may be indications of it being a buyers' market as sellers face competition for potential takers.

"An additional 37,000 flats may be launched by the government these three years to meet the target supply of up to 100,000 flats from 2021 to 2025, and this may cause some demand to shift away from the resale market," said Ms Sun.

"We estimate that resale prices are expected to rise modestly by 3 to 5 per cent in 2024, comparable to or slightly lower than the 4.8 per cent increase in 2023."

However, Huttons' Mr Lee said the longer wait time for each BTO sales exercise could see more buyers turning to the resale market.

In addition, fewer HDB flats will fulfil their minimum occupation period this year compared with 2023, noted Dr Tan.

"Asking prices may remain high, given the lower supply of newer HDB resale flats and the rarity of attractive units," he added.

Dr Tan noted that asking prices for HDB flats may remain high, “given the lower supply of newer HDB resale flats and the rarity of attractive units”.

But market uncertainties and increasing price resistance among buyers should keep the resale price movement "measured", said Ms Wong Siew Ying, head of research and content at PropNex Realty.

"Notwithstanding the uptrend in million-dollar resale flats, we think a combination of cooling measures (in September 2022) and the bumping up of the BTO flat supply has helped to calm the overall HDB resale market," she added.

"We expect the HDB resale volume to remain stable in 2024 - at around the 26,000 to 27,000-unit level - as this segment will continue to cater to the masses. Meanwhile, market uncertainties and increasing price resistance among buyers should keep the resale price movement measured.”