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RESALE prices of public housing flats accelerated in the second quarter of 2024, growing 2.3 per cent over the previous three months on stronger demand amid tepid supply and increased global uncertainties. 

Data from the Housing and Development Board (HDB) showed that the rise, announced on Friday (Jul 26), was a notch higher than the earlier estimated 2.1 per cent released on Jul 1. 

This follows a 1.8 per cent hike during the first quarter. It is also higher than the 1.5 per cent increase in Q2 2023. 

Year on year, prices were up 6.6 per cent, slightly more than the 6 per cent price growth of private residential properties, said Nicholas Mak, chief research officer at Mogul.sg. 

Prices of resale flats have also gained 43.7 per cent since bottoming out in Q2 2019, and 42.5 per cent since Singapore’s “circuit breaker” in April 2020, highlighted Lee Sze Teck, Huttons Asia senior director of data analytics.

Meanwhile, transaction volumes of resale flats rose 4 per cent in Q2 to 7,352 units, from the 7,068 units in the previous quarter. Year on year, this was a 12.9 per cent increase. 

This puts the price growth for H1 2024 at 4.2 per cent, and transaction volumes at 14,420, up 6.9 per cent from the same period last year. 

Analysts attribute the hike in prices and sales volume to “robust demand” for resale flats. 

Demand in mature estates, in particular, was up 18.9 per cent year on year in Q2 with 2,833 transactions, said ERA key executive officer Eugene Lim. 

The proportion of transactions in mature estates also rose to around 40.2 per cent in Q2, from 37.6 per cent in Q1, noted Huttons Asia’s Lee. 

Buyers are drawn to resale flats in these estates because they will not be subject to the stringent resale conditions and subsidy clawbacks of future Build-To-Order (BTO) homes in the area, which are likely to fall under the new Plus or Prime categories, said Lim.

From H2 2024, all new BTO projects will be classified into three categories – Prime, Plus or Standard – based on their location. Plus and Prime flats will come with more subsidies, but with strict curbs on resale. 

There is also is a “fear of missing out” among buyers, said Lee. 

“After seeing a record number of million-dollar flats and a faster pace of price growth in Q1, buyers feared being priced out of the market and hastened their purchases,” he said. 

For instance, Q2 saw the sale of 236 million-dollar resale flats, up nearly 30 per cent from the previous quarter’s 183 units. 

For the year to date, 516 resale flats were sold for at least S$1 million – surpassing the 469 units recorded in the whole of 2023, said PropNex research head Wong Siew Ying. 

“While million-dollar flats and record prices are not the norm, it gives an impression of fast-rising prices in the HDB resale market,” Lee said. 

Economic uncertainties and concerns over job security may have also contributed to the increased demand, said Mak from Mogul.sg. 

“Some homebuyers who could previously purchase private residential properties turned more cautious and acquired HDB resale flats instead,” he explained. “This is because the price of a HDB resale flat is typically about half the price of a condominium unit of similar size and in the same location.”

Supply squeeze 

Besides growing demand, prices were driven by supply tightness in the market, with fewer new flats meeting the minimum occupation period (MOP) this year, said Wong of PropNex.

Based on HDB data, the number of flats reaching MOP in 2024 is estimated to be around 13,000, down from 15,700 units in 2023 and a “bumper crop” of more than 31,300 units in 2022. 

“This will (have an impact on) resale stock available for sale, and in turn put some upward pressure on resale flat prices amid healthy demand,” said Wong. 

There was also a slightly larger proportion of flats being resold at higher prices, she noted. Transaction data showed that 45.7 per cent of resale transactions in Q2 were for flats costing more than S$600,000, up from 42.9 per cent in Q1. 

On the rental market front, there were 58,596 HDB flats rented out as at the end of Q2, a marginal increase of 0.4 per cent from Q1.

HDB approved 9,398 cases to rent out the flats, a 1.7 per cent increase quarter on quarter and 2.9 per cent drop year on year. 

The highest median rental price was for four-room flats in the central region at S$4,400, while the lowest median rental price was for two-room flats in Sengkang at S$2,300.

Analysts believe that resale prices will continue climbing as demand strengthens. 

“The current market outlook for the public housing sector is undeniably positive, underpinned by Singapore’s positive economic growth and improved hiring landscape, which have bolstered consumer confidence,” said Christine Sun, chief researcher and strategist at OrangeTee Group. 

She also pointed to increased housing grants for eligible homebuyers, making resale flats more accessible and affordable. 

Given the booming demand and price growth thus far, OrangeTee raised its price growth projection to up to 8 per cent for the whole of 2024. 

Similarly, Huttons Asia’s Lee believes that HDB resale volumes will likely range between 26,000 and 28,000 units this year. Prices of resale flats are forecast to grow up to 10 per cent in 2024, from an earlier estimate of 3 to 5 per cent, he said.