In 2Q2023, resale flat prices increased by 1.4% q-o-q, above the 1% growth seen in 1Q2023

According to the flash estimates published by HDB on July 3rd the resale flat price increased 1.4% q-o-q in 2Q2023 more than the one% rise recorded in 1Q2023. This also marks the third consecutive period of increase. But, it’s less than the median annual growth rate at 2.5% recorded in 2022, HDB states.

Pinetree Hill main contractor placed the winning bid of $671.5 million, equivalent to $1,318 per square foot per plot ratio (psf ppr).

Volumes of flat transactions for resales fell to 3.9% q-o-q in 2Q2023 to 6,409 units. This is 4.6% lower y-o-y and the lowest volume over the past three years following 3Q2020.

The rapid increase in resale flat rates in the 2Q2023 period is accompanied by a higher demand due to the increased incentives for first-time home buyers, says Christine Sun, senior vice director of research and analysis for OrangeTee & Tie.

In the Singapore’s Budget 2023 which was announced in February, households who purchase four-room or less apartments initially will be eligible for enhanced Central Provident Fund housing grants of $80,000. This is an increase from $50,000 prior to. If you’re looking to purchase five-room flats, the grants are now up to $50,000 from $40,000 before.

With the increased allowances, private property downgraders could be channeled to four-room apartments, according to Sun. This is due to the fact that people over 55 years old can be exempt from the wait-out period of 15 months period that is applicable to private property buyers who purchase a resales apartment if they plan to purchase four-room or smaller flats. According to the ERA’s Lim the 2Q2023 report the proportion of four-room HDB sold transactions was 48.4%, higher than the 45.3% recorded in 1Q2023.

However, even though the grants have provided buyers a boost to their budget for housing but there’s still an inconsistency of price between buyers and sellers that is the cause of the smaller volume of transactions in the last quarter, according to Lee Sze Teck, senior director of research at Huttons Asia. He suggests that a few buyers might opt to go for a Build-to-Order (BTO) flat, since HDB has boosted the availability of flats and has a shorter wait period.

In 2Q2023 the estimated 90 resales of flats were sold at least one million dollars this Lee says as 12.6% lower than the flats worth 103 million dollars that were sold in during the prior quarter. The most expensive flat sold was a adjoining flat in Moh Guan Terrace, which changed hands for record $1.5 million in the month of June.

Despite the record-breaking sale, Lee notes that most of the million-dollar flats took place within the $1 million to $1.1 million price range. “Buyers might be rationalising the high cost in order to get an HDB flat, but more are opting for flats with four rooms,” he says.

As the more BTO flats are constructed in the near future there will be a greater number of resales flats to be sold could rise since owners moving into the BTO flat will have to sell their existing apartment, Lee says. “The rise in the amount of launches for private residential properties could result in more HDB upgraders choosing to sell their homes prior to moving in order to not have to pay an additional 20% ABSD (additional stamp duty for buyers) at the beginning.”

In the meantime, some buyers looking to resell flats could be shifted towards BTO. BTO market, since HDB continues to introduce new flats in various estates. In August, during the BTO exercise 7,700 BTO apartments will be put up for sale, and 6300 BTO apartments will be sold in November.

Due to the rise of both BTO and resale flat supplies, Lee anticipates resale flat price growth to be moderate. Lee expects the full-year rate of price growth to be no greater than five% and an estimated amount of between 24,000 and 26,000.