Huttons’ Comments on HDB 3Q 2023’s Flash Estimates

2 October 2023

Changes to housing policies announced during the National Day Rally impacted the HDB resale market in 3Q 2023.

From 2H 2024, HDB estates will be changed to Central, North, Northeast, West and East regions instead of mature and non-mature estates. New BTO flats will be reclassified to Standard, Plus and Prime flats from 2H 2024. In the Central Region where most of the current mature estates are located, new BTO flats will be Plus and Prime and come with restrictions on resale.

Demand shifted to the existing resale flats in mature estates where there are no restrictions on resale. The reclassification of flats to Prime and Plus may have a role to play in the spike in the number of million dollar flat transactions in August. Buyers are willing to pay more to buy a flat in the mature estates with no restrictions. 50 out of 54 million dollar flat transactions are in mature estates. A 4-room flat at Pinnacles@Duxton was sold for a record $1,394 psf in Aug 2023. A rare executive maisonette at Bishan St 24 was sold for a record $1.45 million in Sept 2023.

The willingness to pay more for existing flats with no restrictions may have contributed to the increase in HDB resale prices by 1.2% in 3Q 2023. HDB resale prices are up 3.8% in the first nine months of 2023 and 19.4% above the last peak in 2Q 2013.

Based on, the number of million dollar flats in 3Q 2023 is estimated to be 127, 21% more than 2Q 2023. It is highly likely that the number of million dollar flats will exceed 400 and account for around 1.6% of total transactions in 2023.

HDB will launch around 6,800 BTO flats in early Oct 2023 and around 6,000 BTO flats in Dec 2023. This will bring BTO supply to around 23,000 in 2023 which is similar to 2022. While there may be applicants who are put off by the penalties for non-selection of flats, there may be applicants who want to secure a BTO flat in mature estates before the new classification kicks in from 2H 2024. The interplay of these factors may not see a significant impact on the resale market.

There will be more completion of BTO flats and private homes in the coming months. HDB owners who are moving to their new homes will need to sell their existing flats thus increasing the supply of resale flats.

The increase in both BTO and resale flat supply may moderate prices in HDB resale flats to around 5% in 2023. HDB resale flat transactions are estimated to be in the range of 24,000 to 26,000 in 2023.