Expected 3-5% growth in the price of HDBs by 2024
Estimates for resale are derived by counting the number of HDB apartments that are coming out of their Minimum Ownership Period (MOP), which is a five- or 10-year period when owners cannot sell their units. Although not all homeowners will sell their properties, the number that leave their MOP is what counts in terms of the flats for resale.
The number of flats that reach the five-year MOP by 2023 will be 15,748 units, which is about half of 2022’s 31,325. She anticipates that in 2024, the number of MOP apartments will shrink to 13,093 – half what it was in 2022.
HDB resale values are forecast to remain stable in the upcoming year. A 3 to 5 percent growth is predicted for 2024.
The moderate growth in price estimates is on par with the HDB market resale forecast of 4 to 5.5% for 2023. But it’s much slower than 10.4% in 2022, and 12.7% in 2021. Prices rose by 3.8 % in the nine-month period of 2023.
This year’s resale markets have been dampened by the increasing supply of flats, inflation-aware buyers’ resistance to price increases, and the impact of cooling measures.
Although the HDB resale prices index has not seen a drop in the overall price, the transaction volume decreased during the year. Analysts predict that in 2023 the total volume for resale flats will be 26500 units, which is 5% lower than 27896 units from the previous year.
The demand for resale goods in certain areas will rise. Increased demand could lead to more million dollar resale deals in certain locations. Some singles will be diverted to the new apartment market, since they are now able to apply in any location,” she said.
More people were interested in buying newer apartments in mature estates with no restrictions on the resale. The buyers viewed these flats as potential capital gains in the future. They are willing to pay more for them.
HDB plans to launch between 20,000 and 25,000 BTO units next year to stabilize prices in the resale marketplace.
HDB announced that it will build 23,000 new Build to Order (BTO), and provide a total 100,000 flats, from 2021-2025 to meet demand.
The market may not be able to replicate the impressive sales in 2021 where over 31,000 flats were sold.
Still, the demand for HDB resale apartments should continue to exceed the 10-year average, which is 22,809 flats, from 2013 to 2022. During the year, a number of policy changes took effect.
There were a variety of factors that influenced the resale property market. These included doubling the grants for buyers of resale properties, a new HDB Flat-Eligibility letter (HFE), which was required prior to purchase, penalties for not choosing BTO apartments and a revised BTO framework designed to hold down the public housing price.
A resale-price correction next year is not expected, despite the increased competition on the BTO markets.
Prices will rise in some areas due to the decreasing supply of MOP flats. The existing stock of flats may continue to decrease as some owners will delay upgrading their flats and remain in their current flats because the cost to replace a home is high. Resale flats will continue to be popular among buyers in need of immediate housing.
Sembawang, Sengkang and Tampines are just a few of the many towns where HDB flats will complete their MOP in 2013. This represents 61 per cent.
The sale of a large adjoined apartment in Bukit Meray for S$1.5million in June 2023 set a new record. Analysts predict that HDB flats will sell for S$1,000,000 or more by the end of 2023. This is a 25 percent increase over last year.
The government decided to revamp the framework of new-build housing for public in 2023 due to the increase and rise in the resale price. BTO flats in 2024 will be classified as Standard, Plus, and Prime. Plus and Prime flats, which are better located, will face tighter resale limits – including 10-year MOPs and a clawback of subsidies.
Although the new framework does not affect existing apartments, it’s possible that some prospective buyers will be put off by tighter restrictions in the case of Plus and Prime units located in prime locations, such as close to town centres and MRT station, and choose to buy resale apartment nearby.
HDB upgraders may also be looking to sell the flats they have received upon completion of their new homes.
The number of new MOP apartments that come from BTO project would decrease each year, reaching 8,000 in 2026. This is due to the fact that the Covid-19 Pandemic caused the development of BTO Flats to be delayed. As a result, the supply of newly finished BTO Flats was lower during the pandemic.
Since 2019, the number of flats available on the secondary housing market (i.e., existing resale apartments) has steadily increased. This will reach a peak in 2026 with 31,000 flats.
In 2024-2026, the release of HDB flats from secondary and BTO markets will help to moderate prices. The resale flats will be in short supply from 2026-2028 as the resale volume is expected to decline.
Even though overall resale value growth slowed this year, the number of million dollar deals increased. HDB flats worth at least S$1m were transacted at 422 units by Nov 30. This is 14% more than in 2022 when 369 transactions topped the chart.