HDB resale price growth slows, despite a record number of million-dollar purchases

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Price resistance is becoming evident in the HDB resale market, as the growth of resale flat prices slowed in 3Q2023. Despite this, million-dollar flat transactions reached a record high of 128 units in the same quarter, according to a research report by Orange Tee & Tie in October. Christine Sun, senior vice president of research & analytics at OrangeTee & Tie, notes that the slower price growth and price declines in certain towns indicate that consumers are pushing back against further price hikes.

In 3Q2023, HDB resale prices increased by 1.2% quarter-on-quarter (q-o-q), marking the 14th consecutive quarter of growth. However, this growth is smaller than the 1.5% q-o-q increase in 2Q2023 and the 2.5% average quarterly growth seen in 2022. Year-to-date, prices have risen by 3.8% in the first nine months of the year, which is less than the 8% growth over the same period in 2022.

OrangeTee & Tie points out that the slower growth in resale flat prices is occurring amid concerns about inflation, as rising interest rates have affected homebuyers’ affordability, remaining elevated for longer than expected.

Despite the slowdown in price growth, HDB resale transaction volumes increased by 2.9% q-o-q in 3Q2023, reaching 6,592 units (as of Sept 28). This increase is attributed to more grants given to first-time buyers of HDB resale flats and the delay in the August Build-To-Order (BTO) sales launch, which redirected more Singaporeans to the resale market. However, on a year-on-year basis, the transaction volume is 9.7% lower than in 3Q2022 when 7,298 units changed hands.

In terms of the proportion of sales, four-room flats decreased from 45.7% in 2Q2023 to 43.8% in 3Q2023, while five-room flats declined from 23.4% to 22.9% during the same period, based on HDB transactions from data.gov.sg. Conversely, the proportion of buyers opting for executive flats increased from 5.5% to 5.9%. The same trend was observed for two-room flats, which increased from 2.3% to 2.8%, and for three-room flats, which rose from 23.1% to 24.6%.

Million-dollar resale flats reached a new record in 3Q2023, with 128 units sold for at least $1 million. This surpasses the previous quarterly record of 111 units in 3Q2022. OrangeTee & Tie predicts that 2023 is likely to surpass 2022’s full-year record of 369 units, as 336 million-dollar flats have already been sold in the first nine months of the year.

Affordability is expected to continue to be influenced by the interest rate environment, as HDB loan packages offered by many local banks are above 3%. This may lead to increased demand for BTO flats, as not everyone qualifies for an HDB loan pegged at 2.6%. As a result, resale prices are projected to grow at a more moderate pace, with OrangeTee & Tie forecasting a full-year price growth of around 4% to 5.5% for HDB resale flats in 2023, significantly lower than the 12.7% growth in 2021 and the 10.4% growth in 2022. In terms of volume, the firm predicts that resale flat transactions will slightly decrease to approximately 26,000 to 27,000 units this year, compared to 27,896 units in 2022.