HDB flat prices have grown at a slower rate in 3Q2023, indicating a price resistance on the HDB resale. Orange Tee & Tie, in a research report published in October, noted that the number of million-dollar flats sold in the same period reached a new record. The slower growth in the market overall and the price declines in some towns last quarter indicate that consumers are resisting further price increases, says Christine Sun. Senior vice president of OrangeTee & Tie’s research & analysis department.

HDB resale price growth in 3Q2023, a 14. consecutive quarter of increases, was 1.2% qoq. The growth in 3Q2023, however, is less than the 1.5% increase in 2Q2023 or the 2.5% quarterly average growth in 2022. Prices have increased 3.8% year-to-date in the first nine month of this calendar year. This is lower than the 8% increase over the first three months of 2022.

OrangeTee & Tie notes that inflationary concerns are behind the slower growth of resale prices, with homebuyers’ affordability being affected by higher interest rates than expected.

Based on HDB data, data.gov.sg, four-room flats have seen the largest growth in resale price, rising 1.8% from $579.740 in the second quarter of 2023 to $589.992 in third quarter. The executive flats were next, with a 1.2% increase from $827,549 on average to $$837.138.

Geylang recorded the largest drop of 3.6% q-o-q, followed by the Central Area (down 3.4%), Bukit Batok (down 2%) and Sembawang (1.8%). Geylang recorded the largest drop of 3.6% from quarter-to-quarter, followed by Central Area (down 2.8%), Bukit Batok (2%) and Sembawang (1.8%). Bukit Timah, Serangoon and Central Area saw the largest q-o q price increases in 3Q2023. These were 38.1% and 10% respectively.

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HDB resale transactions rose 2.9% from 3Q2023 (based on the data collected up to Sept 28) despite the price drop. OrangeTee & Tie’s Sun attributes the increase to grants for first-time buyers of HDB resale apartments, and the delayed launch of the Build-To Order (BTO), which diverted many Singaporeans into the resale sector.

On a year-over-year basis, however, the volume is 9.7% less than 3Q2022, when 7,298 units were sold. According to HDB transactions, the proportion of four-room apartments sold dropped from 45.7% to 43.8% between 2Q2023 and 3Q2023, whereas five-room apartments fell from 23.4% down to 22.9%.

The proportion of buyers who chose executive flats increased from 5.5% up to 5.9%. Two-room apartments also increased in popularity, from 2.3% up to 2.8%. Three-room apartments went from 23.1% up to 24.6%.

In 3Q2023, 128 flats sold at least $1,000,000 set a new quarterly record. The previous record for a quarter was 111 units, set in 3Q2022. Sun says that 2023 is likely to smash the 369 unit record set in 2022 for the full year, since 336 million dollar flats were already signed in this first nine-month period.

Bukit Panjang’s first million-dollar apartment transaction was $1.02m for a 1,367 square foot executive flat on Jelebu Road. Only four towns have not yet recorded a million dollar flat transaction – Sengkang (Chou Chu Kang), Jurong West, and Sembawang.

OrangeTee & Tie believes Sengkang will be the next town with a million dollar flat transaction. This is because the estate has seen ten apartments sold for at least $950,000. Choa Chu Kang, Jurong West and Sembawang have all only seen two million-dollar deals.

OrangeTee & Tie predicts that interest rates will continue to influence affordability in the future. Sun points out that “the HDB loan packages provided by local banks are over 3% and not everyone is eligible to take the HDB loan at 2.6%.” As more flats go up for sale, there may also be a shift in demand to the BTO.