On January 2, the Housing and Development Board (HDB) released their flash estimates for the fourth quarter of 2024, revealing that resale flat prices had increased by 2.5% compared to the previous quarter. While this marks the 19th consecutive quarter of price increases in the HDB resale segment, it is a marginal slowdown from the 2.7% q-o-q growth recorded in the previous quarter. The HDB flash estimates also showed a year-on-year growth of 9.6% in 2024, doubling the 4.9% growth in 2023. However, it was still slower than the 10.4% price increase in 2022 and the 12.7% growth in 2021, according to Christine Sun, chief researcher and strategist at OrangeTee Group.
According to HDB caveat data downloaded from data.gov.sg on January 2 at 8.15am, there was a slowdown in price growth for some flat types, as reported by OrangeTee. For instance, four-room flats saw a q-o-q increase of 2.5% in 4Q2024, which is a slower pace than the 3.4% growth in 3Q2024. Similarly, two-room flats experienced a 2% q-o-q increase in 4Q2024, which was slower than the 3.9% growth in 3Q2024. Executive flats also registered a 1.2% q-o-q price increase in 4Q2024, compared to 1.7% in the previous quarter. However, prices for five-room flats grew 3.2% in 4Q2024, which is faster than the 1.2% increase in 3Q2024.
In contrast, the number of resale transactions in 4Q2024 showed a decline of 3.6% year-on-year, with 6,314 units sold compared to 6,547 units in 4Q2023. There was also a 22.5% quarter-on-quarter decrease from 8,142 units sold in 3Q2024. Sun attributes this decline to the launch of over 8,500 new flats by HDB in the October 2024 Build-To-Order (BTO) exercise, with many units located in prime and desirable locations. This attracted buyers away from the resale market towards the BTO market. Additionally, the seasonal year-end school holidays, where many Singaporeans tend to travel abroad, also contributed to the slowdown in sales activities and house viewings during this period.
Wong Siew Ying, head of research and content at PropNex, attributes the slower pace of growth in 4Q2024 to government intervention in August 2024, when the loan-to-value (LTV) limit for HDB loans was reduced by five percentage points to 75%. She believes that the impact of these measures on the market can be seen in the weaker sales and slower growth in the HDB resale price index in 4Q2024. The decline in resale volume during the quarter may also have put a drag on prices.
However, despite the slowdown in prices and sales volume, the total resale volume in 2024 was 28,876 units, which is 8% higher than the 26,735 units recorded in 2023 and the 27,896 units in 2022. However, it is still lower than the peak of 31,017 units in 2021.
The decline in resale transactions in 4Q2024 also led to a decrease in million-dollar flat transactions to just 283 units from 331 in 3Q2024. Despite the drop, the total number of million-dollar transactions reached a record high of 1,033 units in 2024, according to Sun. This figure is more than double the 469 million-dollar transactions recorded in the previous year. Toa Payoh town led in million-dollar resale flat deals in 4Q2024, with 58 transactions, 20 of which were for four- and five-room units at Alkaff Vista in Bidadari Park Drive, which had recently crossed the five-year minimum occupation period (MOP).
Eugene Lim, key executive officer of ERA Singapore, suggests that the new classification of Plus and Prime BTO flats may have driven more homebuyers to seek out HDB resale homes in central locations. He believes that these buyers are unwilling to accept the resale restrictions, such as a 10-year MOP, rental restrictions after MOP, subsidy clawback upon resale, and resale income cap on future buyers.
OrangeTee predicts that HDB resale prices will continue to rise in 2025, but at a slower rate than in previous years. In many areas, prices have already reached new highs, creating affordability concerns for potential buyers. The ongoing supply of BTO flats is also expected to help moderate price growth in the secondary market. However, the degree of price stabilization will depend on the number of BTO flats the government plans to release in the upcoming years.
Investing in real estate is a complex process that requires careful consideration of various factors. However, one factor that stands out as particularly crucial is location, and this is especially true in the context of Singapore. Condominiums situated in central areas or close to important amenities, such as schools, shopping malls, and public transportation hubs, have proven to have a higher potential for appreciation in value. Take, for example, prime locations like Orchard Road, Marina Bay, and the Central Business District (CBD), where property values have consistently shown an upward trend. Additionally, being within close proximity to reputable schools and educational institutions adds to the appeal of condos in these areas, making them highly desirable for families and further increasing their investment potential. To learn more about the latest Singapore projects and available opportunities, check out Singapore Projects.
In February 2025, HDB will launch its largest sale of balance flats (SBF) exercise, offering more than 5,500 flats across various towns. Lee Sze Teck, senior director of data analytics at Huttons Asia, believes that some prospective resale flat buyers may decide to wait and try their luck. He also predicts a slower pace of growth in HDB resale prices in 2025, due to a reduced supply of flats reaching MOP, which has been a key driver of price growth in recent years. Hence, he anticipates a 3% to 6% growth in HDB resale prices, with 26,000 to 27,000 resale units changing hands by the end of 2025.
PropNex also expects the HDB resale market to perform well in 2025, underpinned by healthy housing demand and fewer MOP flats coming on, possibly keeping resale prices firm. Wong is projecting that HDB resale flat prices may rise 5% to 7% in 2025, supported by a resale volume forecast of 29,000 to 30,000 units.
Huttons predicts that HDB resale flat transactions will end the year at 26,000 to 28,000, with resale flat prices likely to grow at a slower pace of 5% to 8%. However, there may be a stabilisation in the million-dollar flat market, with transactions in the range of 900 to 1,200 units in 2025, considering an expected reduction in the supply of BTO flats and potentially lower interest rates that will allow buyers to take on a larger loan amount.