The public housing scene is seeing a rosy 2024 so far.
In the latest quarter, HDB resale index increased by 2.3%. This is the largest increase in the last 5 quarters. In Q1, the index increased by 1.8%.
Not only did the prices increase, the volume increased too. In the first six months of 2024, the number of resale transactions hit 14,420. That is the highest half-year sales since the first half of 2021.
It's also worthy to note that the number of HDB resale flats transacting at one million dollars and above is also fast increasing in 2024. A total of 419 of such transactions are made in the first six months of 2024 with 95 of them happening in June. For comparison purposes, 470 HDB resale flats transacted at one million dollars and above in 2023. It's pretty certain that we will be seeing this record being broken by the end of Q3 2024.
In fact, the record for the highest price transacted for a HDB flat keeps getting broken. In June 2024, the most expensive HDB flat was sold for S$1,588,000. This record was quickly broken in July 2024 when a premium five-room HDB flat at Margaret Drive was transacted at S$1,725,888. This left many wondering if it's possible that we will see a HDB flat transacting at S$2M very soon. This question was asked in my Telegram Group and below are the responses.
![](https://static.wixstatic.com/media/f9fd89_53187a1f08fe44f696a03651c0388118~mv2.png/v1/fill/w_696,h_646,al_c,q_90,enc_auto/f9fd89_53187a1f08fe44f696a03651c0388118~mv2.png)
Percentage of million-dollar HDB in terms of the total volume is still relatively low, albeit increasing at a somewhat concerning pace. In 2023, the percentage stands at 1.82%. In the first six months of 2024, the number is already approaching 3%. In fact, 4.4% of the total resale volume in June is pertaining to transactions of one million dollars and above.
Such a rosy scene in the public housing market is due to a few main reasons such as reduced supply coming from a lack of BTO and SBF exercises and also lesser flats reaching MOP in 2024. At the same time, the demand for older flats with much bigger spaces remains strong.
The scene is a lot less rosier in the private property scene. Prices of private homes are growing at a lower pace in the second quarter. If we look at the first half of 2024, overall private home prices only expanded by 2.5%. This is a lower number compared to a 3.1% gain in the first half of 2023.
In terms of transactions, private residential sales volume fell by 3.8% with just 9,145 units transacted. This is the lowest number transacted for a 6-month period since the first half of 2020 (which is the height of the Covid-19 pandemic. This is also largely due to an alarming low number of developer sales with just 1,843 units transacted in the first half of 2024. Such a number is even lower than what we saw during the second half of 2008 (Global Financial Crisis).
Developers remaining cautious amid the high interest rate environment contributes to this situation.
Such disparity in the performances of the public and private housing scene can be explained in a change of buyers' behaviour.
Majority of the buyers are now favouring space and convenience more than any other factors when choosing a flat. Old HDB flats with huge spaces and located centrally are in very strong demand. Amenities or prestige which private housing offers tend to pale in comparisons. Instead of buying a smaller new condominium at the city fringes, buyers now prefer to buy a bigger old HDB resale flat in the city center. This trend started since the onset of COVID when people start to realise the importance of having sufficient space in homes as companies adopt and embrace WFH. It has now become a default way of living and working.
The rapid rise of private home prices in the past few years are now stalling as buyers are also becoming increasingly cautious amid the risk of economic uncertainty. It's likely going to take a while before the market gets accustomed to the high prices in the private home scene. It wasn't too long ago when S$2,000 psf was only reserved for premium housing at city fringes or city center. Almost all new private homes launched by the developers are now transacting at S$2,000 psf. The market will need some time to get used to.
This also leads to more and more potential private home buyers to look at resale HDB flats to ensure affordability. As a result, I do not think that the 15 months wait period rule started in 2022 will be removed any time soon. In fact, it's very likely to remain for a long period of time.
If the government is to remove this rule today, you will start to see the number of million-dollar HDB transactions hitting through the roof tomorrow. And I'm sure that is the last thing that the government wants. Public housing should remain affordable.
The number of million-dollar HDB transactions will surely be a closely watched space by the government. If the pace of increase for such transactions happens too quickly, you'll be sure to see additional cooling measures coming very soon.
I don't think that the government will put in hard measures such as additional taxes. However, measures to reduce the appeal of old HDB resale flats in prime areas could be possibly taken based on my speculations. Such measures could include extending a 10-year MOP period to certain resale HDB projects.
This might of course just be my naive thinking.
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