The latest flash estimates released by HDB on January 2nd show a 2.5% increase in resale flat prices in the fourth quarter of 2024, a slight slowdown from the previous quarter’s growth of 2.7%. This marks the 19th consecutive quarter of price increases in the HDB resale segment.
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According to Christine Sun, chief researcher and strategist at OrangeTee Group, the resale prices for HDB flats grew by 9.6% in 2024, double the 4.9% growth in 2023. However, this was still slower than the 10.4% price increase in 2022 and the 12.7% growth in 2021.
OrangeTee also notes that according to HDB caveat data from data.gov.sg, there has been a slowdown in price growth for certain flat types. The median price for four-room flats saw a 2.5% increase in the fourth quarter of 2024, a slower pace than the 3.4% growth in the third quarter. Similarly, the prices of two-room flats rose by 2% in the fourth quarter of 2024, compared to 3.9% in the previous quarter. Executive flats also registered a 1.2% increase in the fourth quarter, compared to 1.7% in the third quarter. In contrast, the prices for five-room flats saw a faster growth of 3.2% in the fourth quarter, compared to 1.2% in the third quarter.
Resale volume in the fourth quarter of 2024 was down by 3.6% year-on-year to 6,314 units from 6,547 units in the fourth quarter of 2023. It was also down by 22.5% quarter-on-quarter from 8,142 units in the third quarter.
Sun attributes the decline in resale transactions to HDB’s launch of over 8,500 new flats in the October Build-to-Order (BTO) exercise, especially in prime and desirable locations. This may have diverted demand away from the resale market towards the BTO market. Additionally, the seasonal year-end school holidays may have also contributed to the slowdown in sales activity.
However, Wong Siew Ying, head of research and content at PropNex, believes that the slower pace of growth in the fourth quarter of 2024 can also be attributed to the government’s intervention in August 2024, when the loan-to-value (LTV) limit for HDB loans was reduced by five percentage points to 75%. She believes that the August 2024 measures are likely to be working through the market, and the thinner resale volume during the quarter may have also put a drag on prices.
In 2024, there were a total of 28,876 resale transactions, which was 8% higher than the 26,735 units recorded in 2023 and the 27,896 units in 2022. However, it is still lower than the peak of 31,017 units in 2021.
The decrease in resale transactions in the fourth quarter of 2024 also led to a decrease in million-dollar flat transactions, from 331 units in the third quarter to 283 units in the fourth quarter. However, this still resulted in a record high of 1,033 million-dollar transactions in 2024, more than double the 469 transactions in the previous year.
Toa Payoh town led the million-dollar resale flat deals in the fourth quarter of 2024, with 58 transactions. 20 of these transactions were for four- and five-room units at Alkaff Vista in Bidadari Park Drive, which had recently crossed the five-year minimum occupation period (MOP).
Eugene Lim, key executive officer of ERA Singapore, believes that the new classification of Plus and Prime classification BTO flats may have driven more homebuyers to seek out HDB resale homes in central locations. These buyers may be unwilling to compromise on the resale restrictions such as a 10-year MOP, rental restrictions after MOP, subsidy clawback upon resale and resale income cap on future buyers.
Sun predicts that HDB resale prices will continue to rise in 2025, but at a slower rate than in previous years. She also notes that in many areas, prices have already reached new highs, creating affordability concerns for potential buyers. The ongoing supply of BTO flats is expected to help moderate price growth in the secondary market, but the degree of price stabilisation will depend on the number of BTO flats released in the upcoming years.
In February 2025, HDB will launch its largest sale of balance flats (SBF) exercise, offering over 5,500 flats in various towns. Some prospective resale flat buyers may decide to wait it out and try their luck in the SBF exercise. Interest rates may also go lower in 2025, allowing buyers to take on a larger loan amount to purchase a new home. This may lead some buyers to set their sights on executive condos (EC) or resale condos, which could affect the stabilization of the million-dollar flat market.
According to Huttons’ projections, there may be 26,000 to 28,000 resale flat transactions by the end of 2025, with prices expected to grow at a slower pace of 5% to 8%. ERA predicts a 3% to 6% price growth, with 26,000 to 27,000 resale units changing hands by the end of 2025. PropNex expects prices to rise by 5% to 7%, with a resale volume forecast of 29,000 to 30,000 units. Ultimately, the supply of BTO flats in 2025 is expected to be reduced, leading to buyers turning to the resale market, which may keep prices firm.