SINGAPORE – As Housing Board resale prices rose during the Covid-19 pandemic, the number of flats that sold for $800,000 to just under $1 million grew the fastest compared with those in lower price categories, according to data from OrangeTee & Tie.
Resale flat transactions of between $800,000 and $999,999 saw the fastest growth in the past two years as well as over the past decade, jumping 190 per cent to 2,201 in 2022 from 757 in 2020, and up a whopping 646.1 per cent between 2012 and 2022.
This development has helped more HDB upgraders make the leap to private housing, said OrangeTee & Tie senior vice-president of research and analytics Christine Sun.
According to PropNex, deals that ranged between $800,000 and $999,999 accounted for 8.2 per cent of overall resale transactions in 2022, up from 5.4 per cent in 2021.
In comparison, resale transactions of between $600,000 and $799,999 rose 108 per cent to 5,972 in 2022, from 2,871 in 2020. These were up 131.6 per cent in the 2012 to 2022 period.
Transactions of between $400,000 and $599,999 – the sweet-spot pricing for the majority of resale buyers – saw a 31.1 per cent rise to 13,214 in 2022 from 10,078 in 2020, but rose just 2.3 per cent in the 2012 to 2022 period. This category accounted for 49.4 per cent of overall resale transactions in 2022.
“With more flats sold at above $800,000, it will not be surprising that these flat owners will aim to sell their flats at even higher prices in future, which will result in more flats reaching the million-dollar mark,” Ms Sun said.
As at March 27, a total of 1,028 million-dollar flat transactions have been recorded since 2012, when the first flat sold for $1 million.
Despite the rising numbers, these deals accounted for 1.4 per cent of 26,727 resale transactions in 2022. And over the past decade, these accounted for just 0.4 per cent of a total of 242,247 resale transactions.
A number of these million-dollar flats are located in mature estates in the central area, and the Toa Payoh, Bishan, Bukit Merah and Queenstown areas, as their buyers tend to be high-income earners willing to pay top dollar for younger resale flats in the downtown core or the city fringe, which are more affordable than condominiums in the vicinity.
This has resulted in record-setting deals at SkyTerrace @ Dawson, where a six-year-old loft made headlines as the most expensive HDB flat sold at $1.418 million in July 2022, surpassing the $1.4 million record set by a three-year-old unit at City Vue @ Henderson in May that year.
But increasingly, those who want cheaper alternatives are finding older five-room and executive flats at the sweet-spot pricing of $1 million to $1.1 million a better bet, compared with younger flats in mature estates.
As a result, older large flats of at least 20 years of age, particularly executive flats in non-mature estates including Woodlands, Yishun, Bukit Batok and Jurong East, began chalking up million-dollar deals in the past year, as younger flats in mature estates hit price records.
Data generated by OrangeTee showed that the number of million-dollar flats aged 20 to 30 years old rose 156 per cent to 64 in 2022 from 25 in 2021, while those aged 30 to 40 years jumped 183 per cent to 85 in 2022 from 30 in 2021.
Analysts said part of the appeal of HDB flats lies in the fact that even the priciest units in the central area, Queenstown, Bukit Merah and Toa Payoh are cheaper, compared with rising condo prices in the vicinity.
For instance, the median price of a new three-bedroom condo unit in the prime district is now at least $2.6 million. In the city fringe, median prices are around $2.3 million, and in the suburbs, more than $1.8 million, said Ms Sun.
With new condo prices in the suburbs rising to more than $2,000 per sq ft in the past year, some HDB upgraders who were priced out of the private residential market returned to the HDB resale market.
Market observer Nicholas Mak said: “They may find that with a budget of $1 million to $1.2 million, they cannot even buy a private three-bedroom condo unit that is of the same size, floor level and attractive location as the million-dollar HDB flat.”
A number of these million-dollar flats are large flat models that are no longer offered in the current Build-To-Order exercises, such as Design, Build and Sell Scheme units, maisonettes and HDB terraces.
Others are smaller flats ranging between 87 sq m and 110 sq m, but their prime location and spectacular views compensate for the shortfall in living space, analysts say.
But while younger flats account for the majority of million-dollar transactions, their growth appears to be slowing. The number of resale flats aged 10 to 20 years increased just 24.5 per cent to 137 in 2022 from 110 in 2021, while those below 10 years of age fell to 80 in 2022 from 88 in 2021, according to OrangeTee.
Property curbs introduced in September 2022, higher interest rates and growing price resistance could further slow sales in 2023, even as the number of million-dollar flat deals remains elevated, going by the resale volume in the first quarter, said PropNex’s head of research and content Wong Siew Ying.
The 15-month wait-out period that restricts certain private property downgraders from buying a resale flat following the sale of their private home also curtailed demand for larger flats, she added.
In the fourth quarter of 2022, the number of million-dollar deals for five-room flats fell 36.8 per cent to 43 from 68 in the third quarter, while that for executive flats dropped 5.4 per cent to 35 from 37 in the same period, according to PropNex.
Nonetheless, the sales volume remained firm in the Jan 1 to March 27 period, with 42 five-room flats and 34 executive flats transacting for at least a million dollars, she noted.
Analysts also said it is too early to tell if the exemption that allows those aged 55 and above to prepare for retirement by buying a four-room or smaller HDB resale flat without waiting for 15 months will result in a significant jump in the number of private downgraders shifting to such flats.
In 2022, the number of four-room flats that sold for at least $1 million dropped to 38 from 44 in 2021. But the number of million-dollar four-room deals jumped 116.7 per cent to 13 in the fourth quarter of 2022 from six in the third quarter.
Twenty such flats have hit the million-dollar mark between Jan 1 and March 27 in 2023, according to PropNex. They are located mainly in the mature estates of Bishan, Bukit Merah, the central area, Kallang/Whampoa, Queenstown and Toa Payoh.
“More people could be turning to four-room flats in the light of higher resale prices and more stringent borrowing limits. Some private downgraders who are over 55 years of age may also have switched to four-room flats, and some may be willing to pay higher prices for choice units,” Ms Sun said.
“Source:[Big jump in HDB resale flats that sold for $800k to $999k during the pandemic] © Singapore Press Holdings Limited. Permission required for reproduction”
