Despite declining volumes, HDB resale price growth is still robust in September: 99.c

Despite declining volumes, HDB resale price growth is still robust in September: 99.co and SRX

While the number of apartments resold fell 14.9%, resale prices for the month rose 1.8% from August 2024 levels.

October 7, 2024

Flash data from SRX and 99.co revealed that despite a decline in September 2024 volumes, resale prices in the public housing market kept rising.

The most recent report, released on Monday, October 7, states that although volumes fell 14.9%, Housing and Development Board (HDB) resale prices increased 1.8% for the month compared to August 2024's level.

The price hike is similar to that of June 2024, which Joel Lim, a data analyst for 99.co, believes is a continuation of the "very high" demand for resale apartments because of the limited supply.

A healthy level of demand

PropNex Realty's head of research and content, Wong Siew Ying, noted that September 2024 symbolised a year of consecutive monthly price increases in the resale flat segment since October 2023, citing historical data from SRX.

Similar to Lim's findings, Wong stated, "Anecdotal observations suggest that the demand for HDB resale flats remains healthy, including from some buyers who may feel that they are priced out of purchasing a private condo of comparable size in the same area."

The month-over-month growth in resale prices for mature estates was 2.3%, whereas non-mature estates saw a 1% increase.

The prices of three- and four-room apartments increased by 2.3% month over month, while those of five-room apartments and executive apartments increased by 1.3% and 0.3%, respectively.

With a 9.2% increase for mature estates and a 10.3% increase for non-mature estates, resale prices increased by 10% year over year from September 2023 levels.

Four-room apartments saw the biggest increase in resale prices this year (11%), followed by three-room apartments (9.7%), five-room apartments (8.6%), and executive apartments (8.2%).

In September 2024, a total of 2,217 resale apartments were sold, an increase of 11.6% over the previous year.

Executive units accounted for the least amount of transactions in September 2024 (6.6%), while four-room apartments made up the majority (43.1%). Compared to five-room units, which made up 24.5% of the month's volumes, three-room unit resale transactions were marginally higher at 25.8%.

Lim said that the most recent cooling measures, which saw the loan-to-value ratio for HDB loans lowered by 5 percentage points as of August 20, were "in a small part" responsible for the 14.9% month-over-month decline in resale volume.

The resale housing market will continue to face competition in October of this year as a "substantial" number of apartments will be offered for sale in HDB's upcoming Build-To-Order (BTO) launch, according to Christine Sun, chief researcher and strategist at OrangeTee Group.

Given that this will be the first launch of the Plus apartments and that singles can buy new BTO apartments outside of immature estates, she predicted that a large number of potential buyers would be attracted to the new BTO apartments.

Sun also believes that the new apartments, especially those with shorter wait times, will give people "in urgent need of housing" a choice other than depending solely on finished apartments on the secondary market.

"Resale demand and prices may be impacted if more apartments with shorter wait times are released in subsequent BTO launches. In the long run, the growth of resale prices might also slow down," she continued.

The latest cooling measures, however, are unlikely to be the cause, according to Huttons Asia CEO Mark Yip, who estimates that it takes about two months for the measures to "reach acceptance" in HDB's system.

"A smaller supply of homes for sale is most likely the cause of the lower volume. Transaction volume is lower when supply is limited. Sellers maintained their asking prices because they knew they had more negotiating power. Buyers were forced to pay higher prices as a result, and HDB resale prices rose 1.8% faster in September 2024, he said.

Since lower interest rates would, in his opinion, result in lower borrowing costs and a larger loan amount, he anticipates that demand will continue to be strong throughout the year.

This might make it possible for purchasers to view HDB resale apartments in more desirable areas. In the upcoming months, prices may rise as a result," Yip continued.

Huttons has revised its 2024 HDB resale volume forecast, which was previously between 26,000 and 28,000, to between 29,000 and 30,000. The real estate firm projects that the growth in resale prices will be between 8 and 10 percent this year.

Million-dollar apartments

In September 2024, 106 HDB apartments were resold for at least S$1 million, up from 105 the previous month.

Sales of million-dollar apartments accounted for 4.8% of the month's total resale volume; 20 of these units were sold in Kallang/Whampoa alone.

Toa Payoh (12 units each), Queenstown (13 units), and Bukit Merah are other noteworthy locations with million-dollar transactions.

In contrast to the increase in the percentage of sales from the S$600,000 to S$700,000 and S$700,000 to S$800,000 price bands, PropNex's Wong noted that the percentage of sales between S$800,000 and S$1 million "seemed to have stabilised" during the month.

"With three months remaining in 2024, the number of million-dollar apartments is likely to exceed 1,000 and reach 3 to 4 percent of total market volume," stated Yip of Huttons.

As for the public housing resale market, Nicholas Mak, chief research officer at Mogul.sg, predicts that between 990 and 1,000 million-dollar apartments could be sold this year, setting a new record.

"With a budget of S$1 million to S$1.5 million, some buyers of these million-dollar apartments believe they could get more value for their money by purchasing HDB resale apartments that are larger and on higher floors than condominium units at that price range," Mak stated.