HDB flash estimates show resale prices up 1% q-o-q in 4Q2023, and 4.8% y-o-y for the whole year
HDB flash estimates released on Jan 2 showed a slower pace of q-o-q resale price increase of 1% in 4Q2023, compared to 1.3% in 3Q2023. The price increase marks the 15th consecutive quarterly price growth. It is also lower than the average quarterly growth of 2.5% in 2022.
According to HDB, 6,440 resale transactions were recorded in 4Q2023, a 2.3% q-o-q drop from 3Q2023.
Christine Sun, senior vice president of research and analytics at OrangeTee & Tie, attributes the slow growth to buyers remaining cautious due to inflationary and affordability concerns, as well as the increase in new HDB residential property supply.
Moreover, a delay in the August Build-To-Order (BTO) exercise caused the higher-than-usual number of new flats to be launched in 4Q2023. The two BTO exercises saw over 12,000 new flats launched in 4Q2023, double the usual number of flats released per quarter, Sun observes.
According to SRI head of research and data analytics Mohan Sandrasegeran, there were 24,346 applicants for the 12,857 BTO flats in 4Q2023. Hence, the rescheduling of the August BTO launch to 4Q2023 could have led home buyers to consider new flats instead of resale flats.
“Furthermore, many of the new flats offered in 4Q2023 were in prime or good locations, and most of these projects had shorter construction periods than in the past,” notes OrangeTee’s Sun.
The BTO launch in Bishan was the first in a mature estate with a waiting time of under three years, notes Lee Sze Teck, senior director of data analytics at Huttons Asia. The Bishan BTO launch’s 732 flats attracted almost 2,500 applicants; hence, it was 3.4 times subscribed.
For the whole of 2023, HDB launched a total of 24,447 new flats, of which 22,780 (93.2%) were BTO flats. Of the balance 1,667 units, 1,500 flats were launched under the Sale of Balance Flats and the remaining 167 units were offered for open booking.
As at Dec 28, 2023, HDB resale volume was 26,628, 3.8% lower y-o-y.
Overall, HDB resale prices increased by 4.8% in 2023, which is less than half the 10.4% growth in 2022.
“The moderation in HDB resale prices in 4Q2023 may also be due to a decline in high-value transactions, including the million-dollar deals that had been more common in earlier quarters,” says SRI’s Sandrasegeran. The slowdown in transaction volume is also typical of the year-end lull during the holiday season, he adds.
The reclassification of BTO flats to Prime, Plus and Standard from 2H2024 resulted in an increase in interest in resale flats, which do not have restrictions. Standard flats are located islandwide and will come with standard subsidies and restrictions. Plus flats are located outside the Central Area but are near MRT stations or amenities. Prime flats are those located closer to the city centre.
Plus and Prime flats will come with more subsidies, but with more stringent restrictions such as a longer minimum occupation period (MOP) of 10 years and limitations for renting out the property.
The new classification system replaces the previous classification of flats into mature and non-mature estates.
“Buyers viewed such flats without PLH (prime location public housing) restrictions as a rare asset in the future and may potentially have better capital appreciation, and hence are willing to buy them now,” says Huttons’ Lee. “However, sellers are also aware of the advantage their existing flats in mature estates have and are holding out for their ideal price.”
According to SRI’s Sandrasegeran, 4Q2023 saw 134 million-dollar HDB resale transactions, a 4.7% q-o-q increase from the 128 deals in 3Q2023.
For the whole of 2023, there were 470 million-dollar
HDB resale transactions, up 27.4% from the 369 deals recorded in 2022. He expects the trend to continue.
The next BTO exercise is in February, and will see HDB release 4,100 new flats in the neighbourhoods of Bedok, Choa Chu Kang, Hougang, Punggol, Queenstown and Woodlands.
While OrangeTee’s Sun expects some demand to be diverted from the resale market to the BTO flats, it may not necessarily lead to a significant drop in resale prices in the near term. She attributes this to fewer flats available for sale in the resale market.
“The number of flats reaching their five-year MOP decreased from 30,920 units in 2022 to 15,549 units in 2023,” says Sun. “The supply of MOP flats is projected to decrease further in 2024 to 11,952 units, resulting in fewer flats available for resale.”
OrangeTee & Tie and Huttons Data Analytics estimate HDB resale prices to rise by a modest 3% to 5% in 2024, which is in line with the 4.8% increase in 2023. SRI, on the other hand, expects overall price growth to be in the range of 3% to 4%.