HDB Resale Price Index
The HDB resale market gained momentum, registering a 2.7 per cent increase from Q2 2024 to Q3 2024, outpacing the 2.3 per cent upturn observed in the second quarter of 2024.
Public housing statistics released by HDB showed that this was the fastest growth rate since the second quarter of 2022, when prices rose by 2.8 per cent. For the first three quarters of this year, prices rose by 6.9 per cent, which is higher than the 3.8 per cent growth registered over the same period in 2023 but slower than the 8 per cent increase over the same period in 2022.
The recent escalation in housing prices can be attributed to the tight housing supply. The number of flats obtaining the minimum occupation period (MOP) dropped substantially by nearly 50 per cent, from 53,902 units in 2021 and 2022 to 27,501 units from 2023 to 2024.
Resale Volume
Despite the price acceleration, resale volume increased to 8,142 units in Q3, up 10.7 per cent from 7,352 units sold in the second quarter of this year. This is the highest quarterly sales since 8,433 units were sold in Q3 2021.
For the first three quarters of the year, 22,562 units were sold, and this marks the highest three-quarter sales since Q1-Q3 2021 when 23,077 resale flats were transacted.
As private property prices remain elevated, the increased demand could be driven by more people upgrading within the same housing segment, from smaller resale flats to larger ones. More private home downgraders may have also opted to buy HDB resale flats for their affordability.
By flat type, demand for larger resale flats continued to trend upwards despite the general uptrend in resale prices. In Q3 2024, 2,392 5-room and executive flats were sold, 12.3 per cent more than the 2,130 units sold in Q2 2024 and 14.8 per cent higher than the 2,084 transactions in Q1 2024. These larger flat transactions also accounted for a higher proportion of total sales, climbing slightly from 29 per cent in Q2 2024 to 29.4 per cent in Q3 2024. The strong demand for larger flats could be attributed to more private homeowners having fulfilled the 15-month wait-out period when they purchase a resale flat.
Rental
The HDB public housing data for Q3 2024 showed a decrease of 4.6 per cent in approved applications to rent out HDB flats, from 9,554 units in Q2 2024 to 9,118 units in Q3 2024. The Q3 drop in rental volume is within expectation, similar to the downtrend observed in previous years. Rental activities usually taper off in the second half of the year, especially during the year-end holidays.
HDB rental demand may face some pressure as more tenants shift to the condo market, with private rents becoming more attractive. Leasing volumes may decrease to 36,500-38,000 units in 2024 from 39,138 units in 2023.
Outlook
Housing demand may drop in the final quarter of this year owing to the year-end holidays and the ample supply of BTO flats released for sale in October. Nonetheless, prices of resale flats may stay elevated as the supply of MOP flats will remain tight. Homeowners staying near future Prime and Plus flats may raise their asking prices as their flats entail a shorter MOP and fewer resale restrictions compared to new Plus or Prime flats.
With resale prices climbing and an increasing number of buyers paying a premium for flats that typically would not command such high prices, it is crucial for prospective buyers to maintain a vigilant and discerning approach when navigating the housing market and making purchasing decisions. It is anticipated that from 2027, an influx of new supply will enter the market, which may heighten competition and limit price growth in the longer term.
The overall HDB resale prices are forecast to grow by 7 to 8 per cent for the full year.