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Addressing Seller Expectations on Rising HDB Resale Prices

May 15, 2024

Recent reports have highlighted a surge in S$1 million transactions in the HDB resale market, alongside record prices for these flats, raising significant concerns about housing affordability and the state of the property market in Singapore. Concurrently, homeowners poised to list their properties may harbour overly optimistic expectations regarding the value of their homes.

The critical question arises: Are million-dollar HDB resale flats an emerging norm or merely a temporary phenomenon? What are the underlying drivers of this trend?

Analysing the Trend of Million-Dollar HDB Resale Prices

A closer examination reveals that the frequency of transactions for million-dollar HDB resale flats has been steadily increasing (Figure 1). This uptick, coupled with the overall rise in HDB resale prices, prompted the Singapore Government to implement a 15-month waiting period on 29 September 2022 for HDB resale buyers who have sold their private properties. It is important to note, however, that this waiting period excludes seniors aged 55 and above who are downsizing to a 4-room or smaller resale flat. Although there was a brief dip in the number of million-dollar transactions following this policy change, the volume of such transactions began to increase again at the outset of 2024. 

This resurgence has raised further questions about housing affordability and the market forces driving such trends, even in the face of government-implemented cooling measures, highlighting the need for a nuanced understanding of market dynamics to effectively address and navigate the challenges of the HDB resale market.

Figure 1: Number of HDB flats transacted at SGD 1 million or higher in the resale market

Source: HDB, DataSense by PropertyGuru For Business

Trends in Visitor Engagement and Market Demand for Resale Flats

According to DataSense, our analysis indicates a rising trend in visitor engagement with property listings for HDB resale flats since January 2024. This trend is quantified by the number of visitors, weighted by the duration of views, interactions with the listings, and engagement with the point of contact, as shown in Figure 2. This increase coincides with the first group of property seekers completing their 15-month waiting period. Additionally, there has been an increase in the availability of such units in the resale market. The heightened interest in resale flats, particularly those of larger sizes and in prime locations, points towards a potential upswing in HDB resale prices, underscoring ongoing shifts in the Singapore property market.

Figure 2: The Demand and Supply Index of HDB resale flats with asking prices from S$1 million to S$2million

Source: DataSense by PropertyGuru For Business

Delving further into the data, approximately 58% of property seekers interested in million-dollar HDB flats also explored other market segments, as illustrated in Figure 3. Notably, 10.86% of these seekers considered condominiums listed for sale, while 3.4% evaluated apartments. This suggests that a segment of buyers, capable of affording private housing, have recalibrated their preferences, favouring HDB flats that offer superior value in terms of size and location. In response, sellers of million-dollar HDB flats are increasingly adjusting their asking HDB resale prices, hoping to capture this specific profile of buyers who recognise the unique value these properties offer in the competitive Singapore property market.

Figure 3: Demand Flexibility for HDB Apartments with asking prices between S$1 million and S$ 2million  

Source: DataSense by PropertyGuru For Business

Managing Price Expectations for HDB Resale Flats

Utilising the Demand Price Trend data from DataSense, we observed that the 25th percentile HDB resale price, weighted by visitor views, was S$1.1 million, while the 75th percentile reached S$1.3 million. Setting asking prices at S$1.3 million would only capture 25 percent of the market demand. In simpler terms, the homes listed above market values will be on the market for a longer time as most buyers will skip the listing and focus on more affordable options.

HDB Resale Prices: Affordability or Meeting the Needs of Certain Niches? 

Despite the increasing transaction volume of million-dollar HDB flats, these transactions predominantly occur within specific niches. Most transactions involving flats priced at one million dollars are concentrated in prime locations, including Design, Build, and Sell Scheme (DBSS) flats and executive apartments. These unique properties appeal to buyers who prioritise space and location over the amenities and exclusivity offered by private condominiums. Moreover, as of April 2024, such transactions represent approximately 2.9% of the Singapore property market.

Considering the government's recent reclassification of new flats with resale restrictions, it would be premature to forecast long-term growth in the volume of million-dollar HDB flat transactions. This evolving regulatory landscape suggests that Singapore property market dynamics may shift, potentially impacting future trends in this segment.

Keep Up to Date with HDB Resale Prices & Trends with PropertyGuru For Business

PropertyGuru For Business provides crucial Singapore property market intelligence for businesses and investors seeking detailed analysis and data-driven insights. DataSense, our dynamic real estate data platform, enables decision-makers to make informed property choices with the latest and most up-to-date datasets. Stay at the forefront of HDB resale market trends and maximise opportunities with precise data insights.

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