HDB resale prices in projected to hit 4% to 6% in 2025: OrangeTee
By EdgeProp Singapore
/ EdgeProp Singapore |
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HDB resale prices may continue to grow this year due to the limited supply of flats that will hit their minimum occupation permit (MOP). The number of flats obtaining their five-year MOP is projected to fall for a third consecutive year from 30,920 units in 2022 to 6,974 units in 2025, says OrangeTee in a report on HDB resale trends 4Q2024, published on Feb 11. It will be the lowest MOP figure in 11 years, with the previous low occurring in 2014 with 5,301 units, says the report.
"If there are no additional property cooling measures and unforeseen macroeconomic uncertainties, prices are projected to rise further this year by 4% to 6%, averaging around 1% to 1.5% growth per quarter," says Christine Sun, OrangeTee Group chief researcher and strategist. "Consequently, prices are expected to reach their most prolonged continuous growth of 23 quarters by the end of this year."
Although the growth streak may be long, the cumulated increase is around 58%, translating to an average increase of 2.5% per quarter, which is still smaller than what we have seen in the 1990s.
2025 set for the longest period of price growth
However, OrangeTee does not expect "a big surge in resale prices" in 2025 since more BTO flats will be launched for sale. The government has announced plans to launch more than 50,000 new flats between 2025 and 2027. This addition will raise their target for new launches from 100,000 between 2021 and 2025 to about 102,300 flats.
Efforts to reduce the waiting times for BTO flats to under three years may encourage more potential buyers to purchase BTO flats, says Sun, which would, in turn, divert more demand away from the resale market.
Considering these factors, OrangeTee anticipates HDB resale prices to increase by 4% to 6%, with sales reaching between 25,000 and 27,000 units.
In 2024, 28,986 resale flats were transacted, higher than the 26,735 units in 2023 and 27,896 units in 2022 but lower than the 31,017 units in 2021.
OrangeTee attributes the decline in resale volume last quarter to the recent BTO launch exercise. Moreover, sales are typically slower during the year-end as families tend to travel during the school holidays, says Sun. As a result, there were fewer house viewings and a contraction in sales activity during this period.
Last quarter saw fewer larger resale flats changing hands, with transaction volume for five-room and executive flats falling 22.2% to 1,862 units in 4Q2024 from 2,392 units in 3Q2024. However, demand for larger flats was higher on an annual basis. A total of 8,468 five-room and executive flats were sold in 2024, about 11.5% higher than the 7,597 units transacted in 2023. "This indicates that there is still robust demand for larger flats, driven by those downsizing from private homes or HDB owners upgrading to bigger resale flats," says Sun.
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