Forecast for 3-5% price increase in 2024 for HDB resale.
HDB resale price growth is expected to be steady in the next year with a 3 to 5% increase forecast for 2024.
The modest price increases are expected to be similar to the HDB resale prices that will rise by 4 to 5,5% in 2023. However, they would be slower than the 10,4% increase in 2022 or the 12,7% surge in 2021. Prices have risen by 3.8 percent in the first nine month of 2023.
The resale industry has been impacted by the slowing of the market this year due to the increase in new flat inventory, inflation-conscious buyers’ resistance towards higher prices, and the residual impact from cooling measures.
The HDB resale index is yet to show a decline in prices but the volume of transactions has decreased. Analysts estimate that the total number of flat resale transactions in 2023 will be 26,500, 5% less than the 27,896 units sold the previous year.
HDB said that it would launch 23,000 new Build To Order (BTO), flats by 2023 and provide 100,000 flats between 2021 and 2025 in order to meet the demand.
It could take some time for the market to repeat the strong sales of 2021 when more than 31,000 apartments were resold.
As long as the job market continues to improve and incomes continue to grow, demand for HDB flats will remain higher than the average 10-year figure of 22,809 units between 2013 and 2022. In the past year, several policy changes were implemented.
The resale housing market was affected by a number of factors, including the doubled grant given to buyers of resale apartments; the new HDB Flat eligibility (HFE) certificate required before purchase; the penalties for not selecting BTOs; and the revised framework for BTOs to control the price of public housing.
The BTO market is increasing competition, but a price drop is not anticipated next year. Instead, the supply is expected shrink.
The number of HDB units that have completed their Minimum Occupation period (MOP) – a period of five to ten years during which owners are prohibited from selling their flats – is used to estimate the resale market. The number of HDB flats that exit their Minimum Occupation Period (MOP) counts as the amount of flats available for sale, even though not all owners put their home on the market.
In 2023, the total number of new apartments that will reach their MOP five-year period is 15,748. This is half of what it was in 2022 when there were 31,325. She predicts that the number of flats in MOP will continue to decrease, to 13,093 units by 2024.
Prices in certain areas will be supported by the shrinking supply of MOP apartments. Existing stock could continue to shrink, as some flat owners delay upgrading plans due to high replacement costs of a new house. Resale apartments will be purchased by buyers who require immediate housing, particularly with the grants and subsidies for resale.
Sembawang and Sengkang are among the towns that will be completing their MOPs next year, making up 61 percent of all units.
This could be supplemented with HDB upgraders looking to sell their homes after receiving the keys to their newly finished homes.
After 2023, the supply of MOP flats that are fresh from BTO projects will decline every year to 8,000 units in 2026. The Covid-19 pandemic delayed the completion of BTO projects that were scheduled to be finished in 2020 and 2021, resulting in a smaller supply of newly-completed BTO apartments during the pandemic.
The supply of MOP apartments on the secondary market, i.e. existing resale properties, has been steadily increasing each year, and is expected to peak at 31,000 units in 2026.
Prices of HDB resale apartments will be moderated by the combined supply of flats released from the BTO and the secondary market between 2024 and 2026. From 2026 to 2020, the resale market will begin to contract as a result of the total resale volumes that have contracted between 2022 and 2023.
The number of million-dollar transactions continued to increase, even though the overall growth in resale prices slowed down this year. As of Nov 30, the number HDB flats sold for more than S$1million was 422 units, which is 14 per cent more than the previous record deal done in 2022.
In June, a 176-square metre flat that was adjacent to another one in Bukit Merah sold for S$1.5million. This is a record resale price. Analysts expect the year 2023 to end with HDB flats selling for S$1million or more, which is 25 percent more than last.
In 2023, the rise in resale prices of public housing flats led to a government overhaul. BTO flats are to be divided into three categories in the second half 2024. The better-located Prime and Plus flats will be subject to tighter resale restrictions, including a MOP of 10 years and clawbacks of subsidies.
The new framework won’t affect existing flats. However, some buyers may be turned off by the restrictions on Plus and Prime apartments in desirable locations (such near MRT stations and town centres) and decide to buy resale properties nearby. This could increase the price of resale homes, depending on their lease balances and conditions.
Demand for resale in some locations will increase. This increased demand may lead to more million-dollar transactions at some of these locations. “Some singles could be diverted away from the resale markets, as they can now apply to new flats anywhere,” she said.
The interest was higher in the newer flats that were in mature estates and had no restrictions for resale. These flats are seen by buyers as having a higher capital appreciation potential in the future, and they are willing to purchase them.
HDB will launch 20,000-25,000 BTO apartments next year in order to stabilize the prices on the resale markets.