HDB Resale Prices Subdued in September as Sales Volume Fell

The HDB resale market seemed to have lost some wind in its sail. HDB resale prices have plateaued, recording a marginal decline from August to September, following months of subdued growth, according to transaction data. Prices of resale flats slipped by 0.5% MOM in September, overturning the trim 0.1% increase in the previous month.

The moderation in prices came amid a dip in the resale volume in September, where transactions declined by nearly 20% to 1,985 units, from 2,473 flats resold in August. When compared to September 2022, the resale volume fell by 23% from the 2,578 resale flats transacted a year ago. The decline in the resale market activity could be partially due to the Ghost month which straddled August and September, as well as the HDB’s build-to-order (BTO) exercise which was postponed from August. Some prospective buyers could have decided to apply for new BTO flats given the desirable locations offered, including in Kallang Whampoa and Queenstown.

Based on transaction data, the overall average price of HDB resale flats softened by 0.5% MOM to $574,554 in September from $577,587 in August (Chart 1). On a year-on-year basis, the average resale price was up by about 1.7% from September 2022. It appears that the HDB resale prices have encountered greater resistance in recent months, as cooling measures and the high interest rates weigh on the market.

Meanwhile, by flat type, the overall average transacted prices for 4-room flats and executive flats decreased by 1.4% and 1.3% MOM respectively in September, following gains posted in the previous month. Meanwhile, the average resale price of 3-, and 5-room flats climbed by 0.7% and 0.5% MOM from August to September (see Table 1).

Evaluating the data by towns and flat types, several segments registered month-on-month declines, with the exception of 3-, and 5-room flats in mature towns which achieved a 1.6% and 2.0% MOM increase in the average resale price respectively in September. Executive flats in non-mature estates saw the steepest decline of 4.2% MOM, with the average resale price falling to $763,510 in September (see Table 2).

In September 2023, mature towns made up the bulk of the top 3 lists of estates in PropNex’s ranking of average transacted resale prices on a per square foot basis ($PSF) by flat types (see Table 3). The highest average PSF price for 4-room flats came in at $988 psf in Central Area, while the Central Area and Bishan posted the highest average unit resale price for 5-room flats and executive flats in September 2023 at $928 psf and $727 psf, respectively.

It is possible that the fewer number of million-dollar resale flats sold in September from August 2023 could have dragged unit prices lower for 4-room and 5-room flats in the Central Area. There were eight such transactions in Central Area in August, but only three in September.

Based on resale transaction data, about 35.8% of resale flats sold in September were priced at below $500,000, compared to 36.4% in August. Meanwhile, about 62.1% of the flats resold in September were transacted at between $500,000 and just under $1 mil – up from 61.4% in the previous month. The proportion of resale flats sold for at least $1 million accounted for about 2.1% of September’s sales – down from 2.2% in August 2023 (See Chart 2).

After the record-breaking sales in August, with 54 HDB flats resold for at least $1 million, the number of such flats transacted fell by 22% MOM to 42 deals in September. This took the number of million-dollar resale flats sold to 336 in the first 9 months of 2023 – representing about 1.7% of total HDB resale volumes. Compared to the same period in 2022, million-dollar resale flat sales were up by about 21% from 277 units resold in 9M 2022. PropNex expects the figure for such sales in 2023 to smash the record of 369 units resold in the whole of 2022.

Four of the 42 million-dollar resale flats are in non-mature towns – Jurong East, Woodlands, Punggol, and Bukit Panjang. The remaining units are located in Toa Payoh (7 units), Bukit Merah (6), Bishan (6), Bukit Timah (3), Kallang Whampoa (3), Central Area (3), Geylang (2), Serangoon (2), Queenstown (2), Clementi (2), and one unit each in Ang Mo Kio and Bedok.

The priciest HDB resale flat transacted in September is a 172-sqm (1,851 sq ft) executive maisonette in Bishan Street 24, which fetched $1.45 million. This was followed by two 5-room flats that were resold at a similar price of $1.43 million. One of them is in Henderson Road, being a 113-sqm (1,216 sq ft) 5-room flat on the storey ranging from the 34th and 36th floor, while the other is a DBSS (design, build, and sell scheme) 5-room flat in Bishan Street 24. The DBSS flat spans 120 sqm (1,292 sq ft) and is situated between the 34th and 36th storey (see Table 4).

Following two years of strong price growth in the HDB resale market, prices are now on a more sustainable growth path, owing to the three rounds of cooling measures from December 2021 that have doused the buoyant market sentiment, and as price resistance takes hold. The ample supply of new BTO flats in attractive locations and more flats with shorter waiting-time could also siphon some buyers from the resale market. PropNex expects HDB resale volume and prices to remain measured going into Q4 2023.

What bears watching in the coming quarters would be the price trajectory of private homes. Should private residential property prices continue to flatten and HDB resale prices see marginal gains, it may encourage some flat owners to consider upgrading to a private home. Meanwhile, the reclassification of flats from the 2H 2024 and with it, the more stringent resale conditions for Plus and Prime flats may nudged some families to buy resale flats instead, which are not affected by the new reclassification framework.

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