HDB resale prices for 2023 rose 4.8%, less than half of 2022's increase

SINGAPORE: Resale flat prices for 2023 rose by 4.8 per cent, less than half of the 10.4 per cent increase in 2022, according to the Housing and Development Board (HDB)’s flash estimates.

The resale price index, which reflects the general price movements in the resale market, grew to 180.2 in the fourth quarter - an increase of 1.0 per cent over the previous quarter, HDB’s flash estimate showed.

This is lower than the 1.3 per cent growth in the third quarter of 2023 and lower than the average quarterly growth of 2.5 per cent in 2022, HDB said in a press release on Tuesday (Jan 2).

The rate of increase in resale prices has continued to moderate following the government’s implementation of a strong pipeline of supply, as well as the introduction of cooling measures to promote a stable and sustainable property market, said HDB.

Among the cooling measures implemented in December 2021, September 2022 and April 2023 were a wait-out period of 15 months before private property owners could purchase a non-subsidised HDB resale flat and the lowering of loan-to-value limit for HDB housing loans.

“More broadly, as global economic activity is expected to ease further into 2024, with domestic mortgage rates at elevated levels, households should continue to exercise financial prudence in their flat purchase,” HDB said.

The resale volume of the fourth quarter in 2023 is also the lowest compared to the last three years, HDB added.

The resale volume in Q4 2023 (up to Dec 28) is 6,440, which is 2.3 per cent lower than the previous quarter (6,592 up to Sep 28). For the full year up to Dec 28, 2023, the total resale volume is 26,628 - 3.8 per cent lower than the total resume volume last year (27,686).

RESALE PRICES AND VOLUME

While the slowdown in the resale market is typically associated with the year-end lull, HDB resale prices in Singapore grew at a slower pace in Q4 2023 as demand was relatively subdued, according to property analysts.

More buyers may have been diverted from the resale market to the Build-to-Order (BTO) market as they were offered more housing options, with more than 12,000 new flats launched for sale in the last quarter, said OrangeTee & Tie's senior vice president of research and analytics Christine Sun.

“Furthermore, many of the new flats were in prime or good locations, and most of these projects had relatively shorter construction periods than in the past,” Ms Sun said.

Resale price growths were also generally “more muted or lower” as buyers "remained cautious due to inflationary and affordability concerns", she added.

Lee Sze Teck, senior director of data analytics at Huttons, also said that some demand from the resale market shifted to BTO flats with a shorter waiting time.

“For example, the Bishan BTO is probably the first BTO in a mature estate with a waiting time of less than three years and attracted almost 2,500 applicants for the 732 flats,” Mr Lee said. 

Some buyers might also have been inclined to apply for BTO flats before the reclassification of BTO projects sets in, said Singapore Realtors Inc (SRI) CEO Thomas Tan.

From the second half of 2024, Build-to-Order (BTO) projects will be classed Standard, Plus or Prime, with different resale conditions attached to each housing type. New HDB flats in "choicer locations" in each region - such as near MRT stations and town centres - will be classed in the Plus category, which will come with tighter resale conditions and more subsidies.

Dr Tan Tee Khoon, Country Manager of Singapore at PropertyGuru, said the dip in resale volume is likely a result of some buyers moving into their newly completed homes and applying for BTO launches, given the recent restoration of manpower supply and construction build times.

“HDB resale prices remained buoyant despite a moderation in transaction volume mainly due to the number of HDB resale flat sales that fetched seven figures. That said, there are signs the market is likely to stabilise next year as the pace of price increase has slowed,” Dr Tan added.

The implementation of cooling measures has also led to more stabilisation in prices of resale flats in the last quarter of 2023, property analysts said.

OUTLOOK FOR RESALE MARKET

Despite the increased competition from the BTO market, a significant drop in resale prices is unlikely in the near term, Ms Sun said.

The scarcity of minimum occupation period (MOP) flats will help to support prices in certain locations.

“Sellers will continue to face intense competition for buyers this year,” she added.

"Nevertheless, the increase in BTO supply can help address the supply-demand imbalance and prevent further escalation of resale prices, leading to better price stability in the long term."

"According to our estimations, prices are expected to rise modestly by 3 to 5 per cent for the entire 2024, which is comparable to or slightly lower than the 4.8 per cent increase that was observed in 2023."

FLAT SUPPLY

HDB launched a total of 24,447 flats in 2023, of which 22,780 were Build-To-Order (BTO) flats for sale. 1,500 and 167 flats were offered under the Sale of Balance Flats (SBF) exercise and open booking of flats respectively.

“The median first-timer application rates for 3-room and bigger BTO flats have been moderating,” HDB said.

In the Q4 2023 sales launches in October 2023 and December 2023, the median application rate for first-timer applicants for 3-room and bigger flats was 0.9 and 0.8 respectively. These are significantly lower than application rates from 2020 to 2022 - during the pandemic years - which ranged from 2.0 to 6.8, HDB added.

HDB previously announced it will offer about 4,100 flats in February 2024 in Bedok, Queenstown, Choa Chu Kang, Hougang, Punggol and Woodlands.

The supply will be subject to review, as project details are firmed up closer to the launch date, it added.

“HDB is committed to providing affordable and accessible housing options to buyers, and will continue to monitor the housing demand closely, making adjustments where necessary.”