The housing supply is poised to be the most significant factor shaping the HDB resale market in 2025. As we look back at 2024, HDB resale flat prices soared to unprecedented heights, with a considerable number of transactions surpassing the million-dollar mark. The price surge can primarily be attributed to the decline in resale flats reaching their five-year Minimum Occupation Period (MOP), which has resulted in fewer units being offered for resale.
Furthermore, the high replacement costs and property cooling measures have made it more expensive for flat owners to upgrade to private properties, especially since taxes are imposed on homeowners who purchase private homes while still occupying their current units. Consequently, many potential HDB upgraders opt to stay put instead of selling their flats, further shrinking the pool of available resale units.
The appetite for resale flats remains robust, even as the government is on track to launch 100,000 new flats into the Build-To-Order (BTO) market from 2021 to 2025 to ease housing demand. The resale market shows remarkable strength, with approximately 28,500 to 30,000 units possibly changing hands in 2024 (Chart 4). This represents a significant increase from the 26,735 units sold in 2023 and eclipses the 10-year average of 24,866 units from 2015 to 2024.
A crucial factor driving this trend is that not all buyers meet the qualifications to purchase a new flat. Moreover, a limited supply of new flats is available for eligible second-time buyers looking to upgrade, as priority is given to first-timers. Other buyers may be deterred by the longer 10-year MOP and stringent resale criteria of the new Prime or Plus BTO flats, preferring to purchase a unit in the secondary market, which entails a five-year MOP and fewer resale restrictions.
Further, demand for housing is projected to rise further, driven by the continuous growth of our population. According to the Department of Statistics Singapore, the citizen population rose by 3.9 per cent or 137,746 individuals from 3.498 million in 2021 to 3.636 million in 2024, while the permanent resident (PR) population increased by 11.5 per cent or 56,280 individuals from 488,651 in 2021 to 544,931 in 2024.
The growing housing demand, coupled with the persistent shortage of supply and challenging upgrading conditions, will continue to foster a competitive environment for potential buyers in the HDB resale market. Home financing is anticipated to show significant improvement in 2025 as mortgage rates are likely to decline further, which could provide a much-needed boost in consumer confidence and encourage more buyers to enter the housing market.
As we look ahead to 2025, resale prices are expected to continue climbing slower than in previous years. Prices have already reached new highs in many locations, raising affordability concerns for numerous buyers. Moreover, the continuous supply of BTO flats will help ease price growth in the secondary market, although the extent of price stabilization will depend on the number of BTO flats the government plans to release over the next few years. For 2025, overall HDB resale prices are projected to rise moderately by 4 to 6 per cent, down from the projected 7.5 to 8.5 per cent increase in 2024 (Chart 4).