Gems await buyers in HDB resale market

House hunters willing to adjust their expectations may be able to meet their needs without busting their budgets

Feb 23, 2023

Ismail Gafoor
Wong Siew Ying

THE Housing and Development Board (HDB) flat resale market is a bit like a degustation menu, offering would-be buyers plenty of choices to pick from – not just in terms of locations island-wide, but across flat types and at various prices.

They are also move-in ready, without buyers having to wait years to collect the keys to their new abode. Plus, there are generous housing grants of up to S$190,000 for eligible first-time buyers of HDB resale flats.

Hence, it is likely there will always be steady demand for resale flats at an estimated 22,000 units a year – with sales rising to more than 30,000 units in a buoyant market. Resale volume hit 31,017 units in 2021 and moderated slightly to 27,896 flats last year.

While many first-time flat buyers look to HDB’s Build-To-Order (BTO) flats as their first option, they may also want to scan the resale market for possible buying opportunities, and uncover some gems in the process.

Resale, but virtually new

Many applicants go for BTO flats for their greater affordability and brand new 99-year leases. There are also many buyers who compromise by purchasing resale flats that have recently attained their five-year minimum occupation period (MOP). They pay more for these flats which are fairly new, but are able to take possession of the unit more quickly.

In 2022, Sengkang, Punggol, and Yishun led HDB resale volumes with 2,300, 2,007 and 1,993 transactions, respectively. PropNex noted that some popular projects in these three towns exited their respective MOPs recently. For instance, in Punggol, Waterway Terraces – completed in 2016 – sold 112 units in 2022, of which 60 are four-room flats at an average transacted price of about S$588,000.

Meanwhile, in Sengkang’s Compassvale Cape, built in 2017, there were 182 flats resold, with 102 four-room units transacted at an average price of about S$557,000.

In Yishun, 58 resale flats were sold at Oleander Breeze, which was completed in 2017. Some 31 four-room flats achieved an average resale price of about S$515,000.

Possible gems in 2023

This year, more than 15,000 HDB resale flats are estimated to reach their five-year MOP, making them eligible to be resold on the open market. Of these, Cheng San Court in Ang Mo Kio and Toa Payoh Apex will likely be among the more sought-after projects, given their relatively central locations within mature towns.

However, resale flats in these towns are usually pricier – the average price for four-room resale flats in Ang Mo Kio in 2022 was more than S$599,000, while it was at nearly S$703,000 for four-room units in Toa Payoh (see Table 1).

Those with a tighter housing budget may want to look at potential options in the suburbs such as Jurong West, Sembawang, Woodlands and Yishun, where resale prices are generally more affordable. For instance, the average transacted price of four-room flats in Jurong West was about S$481,000 in 2022. It was S$505,000 in Sembawang, S$472,000 in Woodlands, and S$468,000 in Yishun.




Sussing out the more affordable options

Resale flat prices rose 10.4 per cent in 2022, showed the HDB resale price index, following a 12.7 per cent increase in 2021. The HDB resale market started to recover towards the end of 2019, after posting six straight years of price decline from 2013 to 2018.

Fresh cooling measures rolled out in September 2022, heightened uncertainties, elevated interest rates and greater resistance among buyers in paying ever-higher prices for resale flats should help moderate the pace of price increase in 2023. PropNex anticipates that resale flat prices could rise by 7-9 per cent this year, with resale volume likely hitting 28,000 to 30,000 units. Sellers, meanwhile, will likely hold on to their asking prices in view of the cost of replacement homes. However, they may want to be more realistic, so they do not price themselves out of the market. Of course, pricing will also hinge on the flat’s location and attributes, and prevailing market conditions.

While HDB resale flat prices are unlikely to experience a sharp downward correction, there are affordable options in the market.

A number of five-room resale flats – with a balance lease of at least 70 years – were transacted at below S$500,000. While these units may not be in central locations, they offer a family-sized home at a competitive price, with a relatively lengthy remaining lease that allows them to be resold later. For instance, a 120-square-metre (sq m) five-room flat in Woodlands Avenue 6, near Admiralty MRT, was resold for S$400,000 in July last year (see Table 2).



In popular city and city-fringe locations such as Bukit Merah, Central Area and Queenstown, there were also four-room flat transactions that did not break the bank. A four-room flat in Klang Lane – walking distance from Little India MRT – was resold for S$535,000 in February 2022. The 85 sq m unit had a lease balance of more than 79 years (see Table 3).



Be led by needs and budget

With the expansion of public transport infrastructure and greater decentralisation of commercial activities, buyers should not be too fixated about the mature and non-mature estate classification.

Instead, they should focus on their housing needs and what they can reasonably afford.

Although the government has ramped up BTO supply, the HDB resale market will still enjoy healthy buying interest due to the aforementioned generous grants, wider options, and ability to move in almost immediately. There is also a shorter time frame of five years (being the MOP) before owners can resell, as opposed to over eight years for BTO flats (including the construction period and MOP).

Some resale flat buyers may also save on hefty renovation costs if the unit is already well-renovated.

Despite the price growth, the HDB resale market still provides options that suit various budgets. That said, buyers may also need to adjust their expectations and consider more affordable units in less central locations, or on a lower floor.

Ismail Gafoor is chief executive; Wong Siew Ying is head of research and content at PropNex Realty.