New HDB flash estimates, released on January 2, have indicated a 2.5% increase in resale flat prices q-o-q during the 4th quarter of 2024. This is a slight decrease in comparison to the 2.7% growth recorded in the previous quarter. It marks the 19th straight quarter of price increases in this segment.
A crucial factor to keep in mind for condo investment in Singapore is the government’s property cooling measures. To maintain a stable real estate market and discourage speculative buying, the Singaporean government has implemented several measures over the years. Among these measures is the Additional Buyer’s Stamp Duty (ABSD), which levies higher taxes on foreign buyers and individuals purchasing multiple properties. Though these measures may affect the immediate profitability of condo investments, they also play a vital role in ensuring the long-term stability of the market, making it a secure investment environment. Furthermore, with the addition of Singapore Projects, investors can take advantage of the various opportunities in the market while also adhering to the government’s regulations.
According to chief researcher and strategist at OrangeTee Group, Christine Sun, the flash estimates reveal a 9.6% growth in HDB resale prices for 2024, which is double the 4.9% increase seen in 2023. However, it is still slower than the 10.4% growth in 2022 and 12.7% growth in 2021.
OrangeTee noted that data from HDB caveats from data.gov.sg downloaded at 8.15am on January 2 showed a slowdown in price growth for certain flat types. For instance, the median price of four-room flats saw a 2.5% q-o-q increase in the 4th quarter of 2024, slower than the 3.4% growth in the 3rd quarter.
Similarly, two-room flats saw a 2% q-o-q increase in the 4th quarter of 2024, compared to a 3.9% growth in the 3rd quarter. Executive flats also registered a 1.2% q-o-q price increase in the 4th quarter, down from 1.7% in the previous quarter.
On the other hand, prices for five-room flats grew by 3.2% in the 4th quarter of 2024, faster than the 1.2% increase in the 3rd quarter.
The 4th quarter of 2024 also saw a 3.6% decline in resale volume compared to the same period in 2023, with 6,314 units changing hands. This was also a 22.5% decrease from the 3rd quarter of 2024, which saw 8,142 units sold.
Sun attributes this decline in HDB resale transactions to the launch of over 8,500 new flats in the October Build-to-Order (BTO) exercise. These attractive flats, with features such as scenic views and proximity to MRT stations, diverted demand away from the resale market towards the BTO market. Additionally, the decrease in sales and market activities during the year-end school holidays also contributed to this decline.
Meanwhile, for PropNex’s head of research and content, Wong Siew Ying, the slower pace of growth in the 4th quarter of 2024 could be attributed to government intervention in August of that year. This was when the loan-to-value limit for HDB loans was reduced by 5 percentage points to 75%.
The total resale volume in 2024 was 28,876 units, which is an 8% increase from 2023’s 26,735 units. However, it is still lower than the peak of 31,017 units in 2021.
The decline in resale transactions in the 4th quarter of 2024 also led to a decrease in million-dollar flat transactions to 283 units, down from 331 units in the 3rd quarter. Despite this decrease, 2024 still saw a record high of 1,033 million-dollar transactions, more than double the 469 transactions in the previous year.
Toa Payoh town led the million-dollar resale flat deals in the 4th quarter of 2024, with 58 transactions. 20 of these transactions were for four- and five-room units in Alkaff Vista, located in Bidadari Park Drive, after having completed the five-year minimum occupation period (MOP).
ERA Singapore’s key executive officer, Eugene Lim, believes that the new classification of Plus and Prime classification BTO flats may have also driven homebuyers to seek out HDB resale homes in central locations. These buyers are not willing to accept the resale restrictions such as a 10-year MOP, rental restrictions after MOP, subsidy clawback upon resale, and a resale income cap on future buyers.
OrangeTee predicts that HDB resale prices will continue to rise in 2025, although at a slower pace than previous years. This has led to concerns about affordability for potential buyers, as prices have already reached new highs in many areas.
Furthermore, the ongoing supply of BTO flats is expected to help moderate price growth in the secondary market. However, the degree of price stabilization will depend on the number of BTO flats released by the government in the upcoming years.
In February 2025, HDB will launch its largest Sale of Balance Flats (SBF) exercise, offering more than 5,500 flats across various towns. Lee Sze Teck, senior director of data analytics at Huttons Asia, believes that this may divert some prospective resale flat buyers, who are waiting for their chance to secure a unit.
Moving forward, ERA expects resale prices to grow at a more measured pace in 2025 due to a lower supply of flats reaching their MOP. Hence, they anticipate a 3% to 6% growth in HDB resale prices, with 26,000 to 27,000 units sold by the end of 2025.
On the other hand, PropNex expects the HDB resale market to remain strong in 2025, backed by healthy housing demand and a lower supply of MOP flats. This will likely keep resale prices firm, and the market will also attract strong buying interest from those with more immediate housing needs, those who did not secure a BTO flat, and those on a tighter housing budget.
PropNex projects a 5% to 7% increase in HDB resale flat prices in 2025, with an expected resale volume of 29,000 to 30,000 units.
Huttons projects that HDB resale flat transactions will end the year at 26,000 to 28,000, with resale flat prices likely to grow at a slower pace of 5% to 8%. They also expect the supply of BTO flats to decrease by 12% in 2025, which could lead buyers to turn towards the resale market. Overall, the million-dollar flat market may stabilize at around 900 to 1,200 units in 2025.
The potential for lower interest rates in 2025 may also encourage buyers to consider purchasing an executive condo or a resale condo instead. With this in mind, buyers may still opt for HDB resale flats, as the supply for BTO flats is expected to decrease in the upcoming year.