August sees a decline in HDB mature estate prices, with million-dollar transactions f

August sees a decline in HDB mature estate prices, with million-dollar transactions falling amid lull for Ghost Month: SRX, 99.co

In July, there were 120 million-dollar resale transactions; now, there are only 104.

September 4, 2024

While sales of million-dollar apartments fell during a lull brought on by Ghost Month, the resale prices of Housing and Development Board (HDB) apartments in mature estates fell 0.2% during the month of August.

According to flash estimates from SRX and 99.co released on Wednesday (Sep 4), overall resale prices posted a 0.5% month-over-month increase, while prices in non-mature estates continued to rise 1.2%. Overall HDB resale prices have increased by 7.5% year over year.

According to Mark Yip, chief executive officer of Huttons Asia, the smaller increase might be the result of more apartments being sold without a cash overvaluation.

Due to the Ghost Month, sales volume decreased in August. In August, it dropped 14.6% to 2,605 apartments from 3,049 the month before. In spite of this, August's resale volume was 5.3% higher than the previous year.

Beginning on August 4, the seventh lunar month is unlucky for buying real estate. According to Christine Sun, chief researcher and strategist at OrangeTee Group, this could have caused homebuyers to put off their purchases.

In August, 104 million-dollar apartments were sold, accounting for 4% of the total resale volume. Compared to the 120 million-dollar apartments sold in July, this represents a decline.

Bukit Merah saw 12 million-dollar flat sales in August. Following Bishan and Kallang Whampoa, each town reported 11 of these transactions. Ten of these were sold by Ang Mo Kio.

Prices for resale varied by type of room. Executive flat prices increased by 1% over the same period, while three- and five-room apartment prices increased by 0.8% each month.

In the meantime, four-room rates decreased by 0.2% month over month.

In August, four-room apartments accounted for 43.4% of the total volume, making them the most popular room type.

Three-room and five-room resale apartments accounted for nearly equal shares of the demand (24.7 and 24.4%, respectively). In August, executive apartments accounted for 7.4% of monthly sales.

Non-mature estates accounted for more than half (60.5%) of resale flat transactions.

The prices of both mature and non-mature estates increased 6.3% and 8.2%, respectively, over the previous year.

The largest annual increase in resale prices, at 8%, was seen in three-room apartments. Executive apartments came in at 5.7%, five-room apartments at 6.8%, and four-room apartments at 7.5%.

Market observers concur that August's resale market was not significantly impacted by recent cooling measures. They did point out that later in the year, it would be easier to see the effects of the restrictions.

According to Mohan Sandrasegeran, Singapore Realtors' head of research and analytics, processing and finishing a resale application takes roughly eight weeks. This year's October and November market data will begin to show the completed transactions from August.

To calm the public housing resale market, the Ministry of National Development announced new limitations on HDB loans for flat buyers in August.

For completed resale applications received by HDB on or after August 20th, as well as for Build-To-Order applications starting with the October 2024 exercise, the loan-to-value (LTV) ratio for HDB loans was reduced from 80% to 75%.

This could result in a slight drop in transaction volume over the next few months, according to Wong Shanting, head of research and market intelligence at ERA Singapore. Buyers who had planned to maximise their leverage are probably going to be impacted by the change.

Buyers may take longer to rework their finances because they must account for a larger cash outlay and are reducing their housing budgets. Wong pointed out that this is not likely to have a big impact on the market.

S$1.48 million was the highest amount ever paid for a five-room flat on Cantonment Road.

The most costly flat to be sold in a non-mature estate was a five-room flat in Punggol Field that brought in roughly S$1.22 million.

On how the cooling measures will impact the number of million-dollar deals in the resale market, analysts are still at odds.

Million-dollar deals might not be significantly impacted because many buyers might not be taking out HDB loans, according to Sun. Some people might be wealthy and unaffected by the decline in LTV.

The tightening of the LTV limit, however, may impede sales of expensive resale apartments at the top end of the market, forcing buyers to pay the difference, according to Wong Siew Ying, head of research and content at PropNex.

As potential buyers consider their options and check their amounts, there may be a slight decline in million-dollar resale transactions in the near future, Wong continued.

According to Yip, there will likely be a high demand for HDB resale apartments in 2024.

According to him, buyers may have little option but to spend at least a million dollars because there is a limited supply of five-room and larger apartments in Singapore's central area.