HDB has released flash estimates on Jan 2 indicating a 2.5% q-o-q increase in resale flat prices in 4Q2024. This growth has eased slightly from the 2.7% q-o-q recorded in the previous quarter. This marks the 19th consecutive quarter of price increases in the HDB resale market. The flash estimates also showed that HDB resale prices grew by 9.6% in 2024, which is double the 4.9% growth in 2023. However, this rate of growth is slower compared to the 10.4% increase in 2022 and the 12.7% growth in 2021, according to Christine Sun, chief researcher and strategist at OrangeTee Group.
OrangeTee noted that HDB resale prices for some flat types have seen a slowdown in price growth, based on the HDB caveat data downloaded from data.gov.sg on Jan 2 at 8.15am. For instance, the median price of four-room flats saw a q-o-q increase of 2.5% in 4Q2024, which is slower than the 3.4% growth in 3Q2024. Similarly, two-room flats rose by 2% q-o-q in 4Q2024, slower than the 3.9% growth in 3Q2024. On the other hand, executive flats registered a 1.2% q-o-q price increase in 4Q2024, compared to 1.7% in the previous quarter. In contrast, prices for five-room flats grew 3.2% in 4Q2024, faster than the 1.2% increase in 3Q2024.
On a year-on-year basis, OrangeTee noted that resale volume declined by 3.6% in 4Q2024 to 6,314 units from 6,547 transactions in 4Q2023. It was also down 22.5% q-o-q from 8,142 units in 3Q2024. Sun attributed this decline in HDB resale transactions to HDB launching over 8,500 new flats in the October Build-to-Order exercise, with many units in desirable and prime locations. She adds that the attractive features of these flats such as scenic views and proximity to MRT stations have diverted demand away from the resale market towards the BTO market. Sales during the seasonal year-end school holidays also typically decrease due to many Singaporeans travelling overseas, leading to a decline in house viewings and sales activities.
Meanwhile, Wong Siew Ying, Head of Research and Content at PropNex, attributes the slower pace of growth in 4Q2024 to government intervention in August 2024, when the loan-to-value limit for HDB loans was reduced by five percentage points to 75%. She predicts that the weaker sales and slower growth in the HDB resale price index in 4Q2024 show that the August 2024 measures are likely to be taking effect in the market. Additionally, the thinner resale volume during the quarter may have put a drag on prices.
The total resale volume in 2024 saw a 28,876 units, which is 8% higher compared to the 26,735 units recorded last year and the 27,896 units in 2022. However, it is still lower than the peak of 31,017 units in 2021, based on PropNex Research and data.gov.sg. On the other hand, the decline in resale transactions in 4Q2024 led to a decrease in million-dollar flat transactions to just 283 units from 331 in 3Q2024 according to OrangeTee. However, the total number of million-dollar transactions reached a record high of 1,033 units in 2024, which is more than double the 469 million-dollar transactions recorded in the previous year.
According to HDB, Toa Payoh town led million-dollar resale flat deals in 4Q2024, with 58 such transactions – 20 of which 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). The new classification of Plus and Prime classification BTO flats drove more homebuyers to seek out HDB resale homes in central locations, indicated Eugene Lim, key executive officer of ERA Singapore. Furthermore, Lim adds that these buyers are unwilling to accept the resale restrictions such as a 10-year MOP, rental restrictions after MOP, subsidy clawback upon resale, and resale income cap on future buyers.
There are expectations that HDB resale prices will continue to rise in 2025, albeit at a slower rate compared to previous years, according to OrangeTee. Sun adds that prices have already reached record highs in many areas, creating affordability concerns for many potential buyers. Furthermore, the ongoing supply of BTO flats is expected to help moderate price growth in the secondary market. However, the degree of price stabilisation will depend on the number of BTO flats the government plans to release in the upcoming years.
HDB will be launching its largest sale of balance flats exercise in February 2025, offering over 5,500 flats across various towns, according to Lee Sze Teck, senior director of data analytics at Huttons Asia. As there is no upfront information on the BTO projects with a shorter waiting time for buyers, they may turn to the resale market. Additionally, interest rates could go lower in 2025, allowing buyers to take on a more sizeable loan amount to buy a new home. 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%.
When contemplating investing in real estate in Singapore, a condo stands out as a promising option due to its potential for capital appreciation. This is largely due to Singapore’s strategic position as a major global business hub and its strong economic foundation, which results in a consistent demand for properties. The real estate market in Singapore has shown a steady rise in prices over the years, particularly in prime locations where condos have experienced significant appreciation. Savvy investors who wisely enter the market at the opportune time and hold onto their condo properties for the long term are likely to reap substantial capital gains. Consider exploring opportunities in Singapore’s condo market through Singapore Condo, a lucrative investment avenue.