HDB resale values rise at a slower rate of 1% during Q4

More flats are put on the market for resale in non-mature areas, but some units are taking longer to sell.

Bukit Merah Toa Payoh Kallang/Whampoa were the HDB towns where there was a high number of million dollar flats. Huttons estimates that these three towns will be responsible for 36.5 percent of the million-dollar transactions in 2023.

HDB sold 22,780 BTO units in 2023. Total flats were 24,447 after 1,500 units sold under the Sale of Balance Flats program and 167 under open booking of flats.

HDB has reported a moderated in the first-time application rate for BTO flats of three rooms or more. Median application rates for first-timers for three-room flats dropped to 0.9 in Q4 of 2023 and to 0.8 for larger units. The application rate for pandemics (2020-2022) ranged between 2 and 6.8.

HDB plans to offer 4,100 new flats at Bedok, Queenstown and Choa Chu Kang in February.

OrangeTee & Tie believes that an additional 37,500 flats could be built by the government in order to reach the goal of providing up to 100,000 apartments from 2021-2025. This would shift demand from the resale sector. More than 63,000 BTO units have been sold between 2021 and 2023.

It is unlikely that resale price will drop significantly in the short term despite increased competition in the BTO sector. In certain areas, the lack of MOPs will support prices.

This is a notable trend considering that the rate of price increases in each quarter was well above 2 percent or 3 percent from Q4 2020 through Q4 2022.

HDB resale values are buoyant due to the high number of HDB flats sold that were worth seven figures.

First-time buyers or HDB upgraders looking for private property but priced out by a post pandemic market were driving the demand for these “million dollar” flats, he explained.

These buyers were searching for houses larger than 1,000 square foot. Many of these buyers turned to resale apartments because they were not seeing any signs of interest rates and prices dropping.

PropNex data revealed that during the fourth-quarter, 134 resale apartments were sold for at minimum S$1 million. This brings the total number of resale apartment sales to 470 in 2023. This is about 26,8 per cent more than the 369 transaction in 2022.

Many experts expect the numbers to continue rising as buyers seek out better locations. Some private property owners, who want to “downgrade”, but have waited out the 15 month wait period that was imposed last year, will also begin to trickle onto the resale marketplace and pay higher prices.

The average resale price of various types flats has seen a modest increase. Prices increased by less 1 percent in Q4 over Q3.

The number flats that are reaching their five-year MOP, and could potentially enter the resale markets has dropped from 30,920 in 2022 to 15 549 in 2023. The supply of MOP units is projected to fall further in 2024, to 11,952 unit.

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Housing and Development Board resale values continued to climb in the final quarter of 2023. But at a slower 1 percent pace, compared with 1,3 percent in Q3.

HDB flash data on Tuesday (Jan 2) showed that the growth in Q4 resale was also below the average quarterly increase of 2.5 percent for 2022.

The increase for 2021 was 12.7%, while the increase for 2022 was 10.4%.

“The implementation in September 2022 of various cooling measures has taken out the wind from the sails and HDB Resale Prices are now growing much slower, with the quarterly growth in price never crossing the 2% mark in 2023.

In Q4 of 2023, the average resale prices for four-room flats increased by 0.7% to S$594,212. Prices for three-room, five-room, and six-room resale apartments each rose by 0.6% to S$415491, and S$693,846.

The quarter-end resale volumes were down by 2.3% to 6,440. This is the lowest volume for the fourth quarter since 2020.

It is likely that the rescheduling Build-To-Order launches of flats in August, October and December diverted attention from the resale sector.

BTO launches took place in Q4 with approximately 24,346 applications competing for a total 12,857 BTO units

It is possible that the reclassification BTO flats into Standard, Plus, and Prime in the second half (2024) will also have an impact. Plus and prime flats will have resale limits, longer MOPs as well as clawbacks on subsidy.

Buyers may have felt compelled to apply for BTO flats prior to these changes being implemented.

In the year ending December 28, 2023, the total number of cases sold was 26,628. That’s a drop of 3.8% from the 27,686 that were recorded the previous.

The overall supply of resale apartments rose in Q4 2020, as owners who are moving to new homes began to sell their existing flats.

Resale flats in mature estates are seeing resilient demand. Resale flats are in short supply and are sold very quickly.

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