3Q 2024 HDB Quarterly Report: Resale Prices Trend Upward Supported by Robust Demand

Figures are based off the official flash estimates for HDB/URA quarterly statistics, released on 1 Oct 2024.

Continuing the trend of moderate price growth for resale flats, the latest HDB flash estimates indicate a modest uptick in prices for 3Q 2024, with the Resale Price Index (RPI) rising to 192.6. Quarter-on-quarter (q-o-q), this represents an increase of 2.5% over 2Q 2024.

Similarly, the volume of resale HDB flat transactions reached 8,035 units in 3Q 2024. This is 20% higher compared to the same period last year, which saw 6,695 transactions.

Some 311 million-dollar flats were transacted in 3Q 2024. This makes up merely 3.9% of the 8,035 resale transactions.

Despite the robust growth in transaction volume, prices for most resale flats remained affordable, with 77.0% of HDB resale transactions under the $750k mark.

This increase in transaction volume is due to a confluence of factors including unsuccessful applicants from June Build-To-Order (BTO), homebuyers looking for centrally located flats without new restrictions, and weaker buyers’ sentiment in the private market.

Some HDB upgraders are being priced out of private homes in 3Q 2024. Looking at non-landed private home caveats, purchasers with HDB addresses fell to 28.8%. This contrasts with 37.2% and 33.8% recorded in 2Q 2024 and 1Q 2024 respectively.

The lower number of condo upgraders likely means that these homebuyers defaulted to the HDB market instead, driving transactions and therefore prices. This homebuyer group has the capital and are willing to purchase million-dollar flats, leading to the rise in transactions.

The above statistics on the HDB resale market largely reflect the market conditions prior to the lowering of the Loan-to-Value limit for HDB loans from 80% to 75% on 20 August 2024 to cool the resale market and encourage greater prudence among home buyers.

Revised GDP Forecast and Rate Cuts Offer Hope, But Rising Retrenchments Weigh on Buyer Confidence

According to the Monetary Authority of Singapore (MAS), private sector economists have revised their gross domestic product (GDP) growth forecast for 2024 from 2.4% to 2.6%. Paired with the Federal Reserve’s latest rate cut and other positive economic indicators, this could renew homebuyers’ sentiment.  Furthermore, the overall unemployment rate remained low at 2.7% in the first half of 2024.

But more concerningly, the number of retrenchments has been steadily increasing since Q4 2022, with retrenched citizens taking longer to return to work. These factors combined could lead to more cautious buyer sentiment.

HDB Resale Price Index (RPI) and Transaction Volume

The HDB RPI exhibited stable growth, rising by 2.5% q-o-q to 192.6 in 3Q 2024; this marks the highest growth observed since 3Q 2022. The price index also saw an uptick of 7.9% year-on-year (y-o-y).

Based on resale flat transactions, the volume of HDB transactions saw continued growth for the third consecutive quarter.

The 8,035 transactions recorded in 3Q 2024 is a 9.3% increase q-o-q from 7,352 transactions in 2Q 2024, and a 20% increase y-o-y from 6,695 transactions in 3Q 2023. This is also the highest number of transactions recorded in a quarter since 3Q 2021.

Chart 1: HDB Resale Index vs Number of Transactions

Source: HDB, ERA Research and Market Intelligence as of 1 October 2024
*Based on flash estimates

This increase in transactions could be a result of homebuyers who were unsuccessful in their June Build-To-Order (BTO) application turning to the resale market instead.

Over the years, the HDB market has consistently bucked the trend of lower transaction volumes associated with the Hungry Ghost Festival. With younger Singaporeans becoming less superstitious and less influenced by such beliefs, more of them have been purchasing resale HDB homes during this period, driving up transaction numbers.

Secondly, as the reclassification of BTO flats kicks in, entailing resale restrictions might discourage and deter homebuyers from purchasing a BTO flat, instead driving them to the resale market.

Next, weaker buyer sentiment has led to fewer private home upgrades in 3Q 2024. Looking at non-landed home caveats, purchasers with HDB addresses fell to 28.8%. This contrasts with the 37.2% and 33.8% recorded in 2Q 2024 and 1Q 2024 respectively.

More than half of HDB transactions were below $750k

Chart 2: HDB Transactions by Price Ranges

Source: data.gov.sg as of 30 Sep 2024, ERA Research and Market Intelligence

Some 53% of the HDB resale transactions in 3Q 2024 fell between $500k and $750k, a comfortable price range for most Singapore homebuyers. Another 24% fell between $250k and $500k.

Million-dollar flats

Some 311 million-dollars flats were transacted in 3Q 2024. This makes up merely 3.9% of the 8,035 resale transactions.

Chart 3: HDB Flat Transactions over $1m

Source: HDB as of 26 September 2024, ERA Research and Market Intelligence
*Based on flash estimates

With fewer HDB flats meeting the Minimum Occupation Period (MOP) in 2024, demand for MOP flats in prime locations have skyrocketed, resulting in the continued rise in the number of million-dollar flats.

Furthermore, BTO projects in mature estates no longer offer 5-room and larger flats. As such, we have observed more 4-room million-dollar flats transacted in the quarter. These 4-room flats appeal to homebuyers looking for larger, more centrally located homes.

Who are purchasing these million-dollar flats?

HDB upgraders who might have traditionally opted to purchase a private condominium have opened their options to purchasing these larger, newer and centrally located million-dollar flats. With the rising prices of private homes, they see the value proposition and are willing to pay for these cream-of-the-crop resale flats.

In addition to this, there are also private property sellers emerging from the 15-month wait-out period with the capital to fund these million-dollar HDB purchases.

October BTO launch set to draw some buyers away from the resale market

The final BTO launch of 2024 will take place in October. This launch will constitute 14 new projects, consisting of 8,500 units. This will be the first BTO launch to include the new classification of Standard, Plus, and Prime flats, providing a wider range of housing options, including flats in attractive locations.

As the new Plus flats, along with Prime flats would have more stringent resale restrictions such as a longer MOP, resale income ceiling, and subsidy clawback upon resale.

These resale restrictions might discourage and deter homebuyers from purchasing a BTO flat, instead driving them to the resale market, particularly in prime and choicer locations, such as in mature estates, central Singapore or near MRT stations.

Conclusion

The HDB resale market experienced a surge in transaction volume that continues to drive price growth, albeit at a moderate pace.

The growth in transaction numbers can be attributed to a lower number of HDB homeowners upgrading to a private property in the quarter, due to a variety of reasons.

With private homes becoming increasingly expensive, HDB upgraders and private home downgraders are instead turning to the HDB resale market. This also extends towards larger and higher value HDB flats with strong locational attributes.

The lower number of condo upgraders likely means that these homebuyers defaulted towards the HDB market instead, driving transactions and therefore, prices. This homebuyer group also likely has the capital to purchase million-dollar flats, leading to the rise in transactions.

But with the re-classification of BTO flats, we can expect some buyers to turn to the HDB resale market in efforts to avoid the more stringent resale conditions.

Going forward, we can still expect strong demand and competitive prices for larger flats, such as 5-room and Executive flats, as the upcoming Plus and Prime BTO flats do not include 5-room or larger layouts.

Performance of the resale market should stay accurate to ERA’s 2024 forecast of 3-5% growth in prices, with 29,000 to 30,000 resale flats expected to move.

Disclaimer

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