HDB Resale Prices Surge 9.6% in 2024

A Surge in Prices Despite Cooling Measures

The Housing and Development Board (HDB) resale market in Singapore experienced a remarkable rise in prices in 2024, with prices increasing by 9.6% year-on-year. This growth rate was significantly higher than the 4.9% rise recorded in 2023, reflecting the strong demand and tightening supply in the market. The continued upward trend in HDB resale prices, which has been ongoing since the second quarter of 2020, paints a picture of a resilient housing market. However, as the year progressed, there was a noticeable slowdown in price growth, with the last quarter of 2024 recording a modest 2.5% increase compared to the 2.7% growth in the third quarter. This shift indicated that the market may be approaching a phase of moderation after years of rapid growth, driven by various factors including government cooling measures and changing market dynamics.

Factors Driving the Surge in Resale Prices

Several key factors contributed to the sharp rise in resale prices throughout 2024. The most significant driver has been the strong, broad-based demand for HDB flats. In 2024, the total number of resale flats transacted reached 28,876 units, a notable 8% increase from the previous year's 26,735 transactions. This surge in volume, coupled with higher prices, reflects a property market in which more homebuyers were actively seeking resale flats, particularly in well-established areas and locations with better accessibility to amenities.

The primary reasons behind this demand include limited housing supply, shifting preferences among homebuyers, and the impact of the COVID-19 pandemic on the real estate market. The COVID-19 pandemic caused disruptions in both the construction of new flats and the mobility of residents. As a result, many buyers turned to the resale market, seeking immediate ownership in well-developed areas, where new flats would take longer to be completed. The economic recovery from the pandemic further supported the confidence of buyers in the housing market, driving more transactions and higher price growth.

Furthermore, the demand for more centrally located homes was particularly strong. Many buyers, especially those coming from the private property market, sought resale flats in well-connected, mature estates where they could find convenience in terms of transportation, schools, and other essential services. The continued preference for flats in these locations resulted in intense competition, which helped push up resale prices. This growing trend is reflected in the increased number of million-dollar transactions that have become more common in recent years. By October 2024, there had already been 377 million-dollar sales, surpassing the total number for all of 2022.

Government Cooling Measures and Policy Adjustments

Despite the strong growth, the government has been actively managing the housing market to prevent overheating and ensure its long-term sustainability. One of the notable interventions in 2024 was the reduction of the loan-to-value (LTV) limit for HDB loans, which was lowered from 80% to 75% in August 2024. This move was designed to curb the risks associated with over-leveraging by prospective buyers, encouraging greater financial prudence in the market. The LTV adjustment aimed to temper excessive demand, ensuring that buyers do not stretch themselves financially in a rising-price environment. By reducing the amount of financing available, the government hoped to prevent the formation of speculative bubbles and encourage more responsible borrowing practices.

Additionally, the government has consistently signaled that it will closely monitor the market and adjust policies as needed to maintain stability. While the aim is to foster a sustainable and stable property market, the government’s approach is also intended to protect buyers from making overly risky investments during a period of high price appreciation. As the resale market continues to be influenced by cyclical factors, policymakers remain prepared to step in with further interventions if necessary to ensure that the property market does not become unsustainable or prone to sharp price corrections in the future.

Moderation in Transaction Volume and Price Growth

Despite the significant price growth in 2024, the market showed signs of cooling towards the end of the year. In the fourth quarter, the number of resale flats sold fell by 21.4%, from 8,035 units in the third quarter to an estimated 6,314 units. This decline in transaction volume was attributed to several factors, including seasonal fluctuations and the effects of government measures. The introduction of tighter financing conditions, such as the lower LTV limit, may have deterred some buyers who were previously considering purchasing in the resale market. Additionally, the usual cyclical nature of the real estate market, with demand typically slowing in the later part of the year, also contributed to the dip in sales.

The slowdown in price growth in the final quarter of 2024 reflected these trends, with prices increasing by only 2.5%, down from the 2.7% growth recorded in the preceding quarter. This deceleration in price growth suggests that the market may be transitioning into a phase of stabilization. Analysts and experts have pointed out that, while demand remains strong, the lower transaction volume and slower price increases are indicative of the market cooling off from its rapid growth phase. As such, the forecast for 2025 suggests that while prices will likely remain stable, there is little expectation of another explosive growth phase in the near future.

HDB's Efforts to Address Supply Shortages

In response to the high demand and rising prices in the resale market, the HDB has been taking steps to address supply shortages and provide more affordable housing options for Singaporeans. In 2024, the HDB launched a total of 21,225 new flats, which included 19,637 Build-To-Order (BTO) flats and 1,588 Sale of Balance Flats. These efforts aimed to alleviate some of the pressure on the resale market by offering new flats for those who are willing to wait for their completion. The launch of new BTO flats is part of the government's ongoing commitment to meeting the housing needs of the growing population and to ensuring that all Singaporeans have access to affordable housing options.

Looking ahead, HDB plans to roll out approximately 5,000 BTO flats in February 2025, in locations such as Kallang/Whampoa, Queenstown, Woodlands, and Yishun. These new launches are expected to provide more affordable options for buyers and ease some of the demand pressure on the resale market. Furthermore, over 5,500 balance flats will also be offered in what is expected to be the largest such exercise to date. These additional flats are intended to cater to those who may not have been successful in securing a flat during earlier exercises, as well as to provide more choices for prospective buyers in need of immediate housing.

Outlook for the HDB Resale Market in 2025

The demand for HDB resale flats is expected to remain strong in the coming months. Analysts predict that the secondary market will continue to attract buyers, especially as private home owners who have completed their 15-month wait-out period re-enter the resale market. Additionally, the resale market continues to draw buyers with more urgent housing needs, such as those looking to purchase in more central locations that are not subject to the stricter conditions of Plus and Prime flats.

Despite the moderation in price growth in the final quarter of 2024, experts anticipate that the resale market will remain relatively stable in 2025. As the supply of new flats increases with the ongoing BTO launches, there is hope that the resale market may see some relief, although it is unlikely that the price growth experienced in 2024 will be repeated. Given the government’s ongoing monitoring of the market and its readiness to adjust policies as needed, the outlook remains one of cautious optimism. As always, prospective buyers and sellers must remain vigilant and financially prudent when navigating the ever-changing landscape of Singapore’s HDB resale market.

Conclusion

In 2024, the HDB resale market in Singapore experienced strong growth, with prices rising by 9.6% and the total number of transactions increasing by 8%. Despite the positive momentum, the fourth quarter saw a slowdown in price growth and transaction volume, signaling that the market is entering a phase of moderation. Government measures, including the reduction in the LTV limit, have played a role in cooling the market, but the underlying demand for resale flats remains strong. With new flats being launched in 2025, the government continues to take steps to address supply constraints and ensure a stable housing market. Looking ahead, while the pace of growth may slow, the resale market is expected to remain resilient as Singapore's property landscape continues to evolve.

Shaun

Founder

With over a decade of expertise spanning investment advisory, investment banking analysis, oil trading, and financial advisory roles, RealisedGains is committed to empowering retail investors to achieve lasting financial well-being. By delivering meticulously curated investment insights and educational programs, RealisedGains equips individuals with the knowledge and tools to make sophisticated, informed financial decisions.

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Shaun

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