According to data tabulated by OrangeTee, a record number of million-dollar deals were also inked in 2Q2024, with 236 resale flats changing hands for more than $1 million. This surpasses the previous quarterly high of 183 deals in 1Q2024.
Demand for older resale HDB flats, particularly those at least 40 years old, has been picking up in recent years. The trend has culminated in a record half-yearly high in the first six months of this year, based on a research paper published by OrangeTee Group on July 30.
There were 3,042 HDB resale transactions in 1H2024 that involved older resale flats of at least 40 years old. This surpasses the previous half-yearly record of 2,412 transactions that was set in 1H2023.
According to Christine Sun, chief researcher and strategist at OrangeTee, the total number of transactions that involve older flats is on track to set a record high this year, as the first half of 2024 already accounts for 64% of the previous yearly high, which was set last year when 4,750 older flats changed hands.
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“More homeowners are buying older flats despite their declining leases,” she says.
Sun adds that sales involving older HDB flats also represent a growing proportion of the resale HDB market.
About 22% of the 13,838 HDB resale transactions inked in 1H2024 were flats of at least 40 years old. In comparison, older flats made up 18.4% of total HDB resales in 2023, increasing from 17% in 2022 and 16.4% in 2021.
Sun says that a change in housing policies and affordability are behind the strong demand for older resale flats.
“For instance, buyers can now take an HDB housing loan of up to 80% loan-to-value (LTV) limit if the remaining lease of the flat can cover the youngest buyer to the age of 95. This is even if the flat has less than 60 years left on its lease,” she says.
Moreover, the Home Improvement Programme has revitalised many older HDB estates, resulting in a “significant” improvement to the living environment and the quality of life for the residents in these estates, says Sun. This has helped to make older estates more appealing for new residents.
But the most significant reason behind the appeal of older HDB flats is their relative affordability over younger resale flats that are less than 10 years old. “Demand for older flats may continue to rise as prices of newer flats are substantially higher, although the price gap between newer and older flats has closed over the past year,” says Sun.
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According to resale data tabulated by OrangeTee, the average price of a younger resale flat (of less than 10 years old) was $652,283 last quarter, compared to the average price of $467,940 for older resale flats (of at least 40 years old). This represents a price gap of about 39.4%.
Sun notes that this price gap is narrower compared to 43.1% in 2Q2023. She attributes this to the fact that the average price of older resale flats grew 8% over the 12-month period, compared to the 5.2% price growth for younger resale flats over the same period.
The HDB estates that recorded the greatest number of transactions involving older resale flats last quarter were: Bedok (232 units), Ang Mo Kio (200 units), Kallang/Whampoa (111 units), Bukit Merah (110 units) and Toa Payoh (109 units).
In general, the HDB resale market saw a notable increase in resale transactions and price appreciation in 2Q2024. Resale prices in 21 out of 26 HDB towns increased compared to 20 in the preceding quarter, based on transaction data from HDB.
The HDB town that saw the largest price gain was Geylang where average prices rose 13.1%, from $531,062 in 1Q2024 to $600,565 in 2Q2024. It was followed by Marine Parade (11.5%), the Central Area (9.3%), Toa Payoh (7.1%), and Pasir Ris (5.5%).
Sun says that the price growth is attributed to the stronger demand for resale flats, helped by increased housing grants for eligible home buyers provided by the government.
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In addition, she opines that the newly launched HDB resale portal has helped to streamline and expedite the home selection process for prospective resale flat buyers. “The faster and more efficient home-purchasing process may have attracted more buyers to the secondary market, as they can make listing comparisons more easily and purchase a home more quickly,” she says.
The HDB resale market is also on track to double the number of million-dollar flat transactions this year compared to the previous year.
According to data tabulated by OrangeTee, a record number of million-dollar deals were inked in 2Q2024, with 236 resale flats changing hands for more than $1 million. This surpasses the previous quarterly high of 183 deals in 1Q2024.
In total, the first six months of this year has recorded 419 million-dollar transactions, which is close to the 469 million-dollar deals struck in the whole of 2023.
Sun also notes that more and more flats are crossing the $1.5 million threshold. Only one unit fetched more than $1.5 million in 2Q2023 and only two units crossed this threshold in 1Q2024. But the previous quarter saw nine resale flats change hands for more than $1.5 million.
Meanwhile, the number of resale flats that fetched at least $1.3 million grew to a record-breaking 28 transactions in 2Q2024, bringing the total number of such transactions to 112 units for the period of 4Q2021 to 2Q2024. No flats were sold at this price range prior to 4Q2021.
“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,” says Sun.
She adds that competition for buyers in the secondary market looks set to stiffen in the coming months as the government releases more BTO flats in October under the new classification.
“Given the robust demand for resale flats and that price growth is on target, we have revised our price projections higher, with an expected increase of up to 8% this year,” she says.