Higher Supply of BTO Flats in 2023 Moderated Demand for HDB Resale Flats

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Higher Supply of BTO Flats in 2023 Moderated Demand for HDB Resale Flats

Maelyn Lagman

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The HDB resale market across all regions showed signs of stability, with a moderate increase in prices, albeit at a slower pace and a steady volume of transactions.

A bar and line chart showing the rental transaction volume and price movement of HDB resale flats in Singapore in 2023

Average resale prices ranged between $574,290 in February and $617,730 in December, representing a slight increase of 7.53% from the beginning to the end of the year. Transaction volume remained fairly consistent, with a range of 1,842 to 2,572 HDB flats sold per month. It fell slightly from March to April but quickly rebounded in May and remained steady for the remainder of the year.

Higher supply of BTO flats moderated demand from first-time buyers 

The slower rate of price growth for HDB resale flats across Singapore in 2023 could be attributed to the number of Build-to-Order (BTO) flats launched and completed, drawing first-time homebuyers away from the resale market. 

There were 21,400 BTO flats completed in 2023, the largest number of homes to be completed since 2018, and 12,000 BTO flats launched for sale in the last quarter of the year. HDB launched a total of 24,447 flats in 2023, of which 22,780 were BTO flats for sale. 1,500 and 167 flats were offered under the Sale of Balance Flats (SBF) exercise and open booking of flats respectively. 

Many of these new flats were in prime or good locations with relatively shorter construction periods than in the past, due to the recent restoration of manpower supply, indicating a shorter waiting time for buyers.

Some first-time homebuyers may have also been inclined to apply for BTO flats before the reclassification of BTO projects set in in the second half of 2024. 

New BTO classification

In his National Day Rally 2023 speech, Prime Minister Lee Hsien Loong unveiled a revised BTO flat classification system designed to better mirror the HDB landscape. Beginning in H2 2024, BTO launches will be classified as Prime, Plus, or Standard flats based on locational attributes, proximity to amenities, and MRT network access.

The Prime and Plus categories will impose stricter buying and resale restrictions, aimed at moderating price appreciation in premium locations. These flats will have a 10-year Minimum Occupation Period (MOP) and subsidy clawbacks upon resale.

Another notable policy change permits singles aged 35 and above greater housing options. Eligible singles can now purchase any type of 2-room Flexi BTO flat, expanding their choices beyond non-mature estates. In the resale market, singles have the flexibility to buy any size of Plus and Standard flats, and only 2-room Prime flats.

These adjustments provide increased options for potential homeowners, particularly first-time buyers, with minimal anticipated impact on the resale market. Additionally, HDB flats and estates will prioritize senior-friendly designs, addressing the needs of the aging population.

PropertyGuru has also reported that enquiries for property listings have eased, with a recorded 15.3% decline in listing enquiries quarter-on-quarter, likely influenced by new BTO launches in prime locations. 

Fewer buyers paid COV for HDB resale flats

Fewer homebuyers also paid Cash Over Valuation (COV) in 2023. Only 15% of buyers forked out COV when buying a HDB resale flat in the last three months of the year, down from almost 30% in the same period in 2022. The median COV amount paid remained relatively stable at about $30,000. 

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Should you sell your HDB resale flat in 2024? Speak to Ohmyhome Super Agents today!

Despite the moderation in HDB resale prices, if you’re genuinely looking to buy or sell a home in 2024, you should remain level-headed when it comes to your property transaction. It may be dangerous to gamble on whether we’re at an inflection point. Rather than timing the market, you should seek the advice of a property agent to make your decision based on your real financial situation. 

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