8 HDB units changed hands for at least S$1 million in September as resale market remains buoyant

SINGAPORE — Even as Singapore is experiencing its worst economic downturn, eight government-built flats still sold for above S$1 million in the resale market in September. 

A report by real estate portal SRX on Thursday (Oct 8) showed that this includes one five-room Housing and Development Board (HDB) flat at The Pinnacle@Duxton in Tanjong Pagar, which sold for S$1.258 million.

It is believed to be a record high for a resale HDB flat. The 107sqm unit is on the 43rd to 45th floor in Block 1B in Cantonment Road, with a lease that began in 2011.  

The recent eight transactions were more than the five HDB flats that sold for more than S$1 million in August.

Million-dollar transactions for HDB resale flats are still an outlier and do not reflect overall market trends, analysts told TODAY.

Ms Christine Sun, head of research and consultancy at property firm OrangeTee, said that the number of such transactions seems to have fallen.

There were 38 million-dollar transactions for HDB resale units in the first eight months of this year. For all of last year, there were 64 such transactions, and 71 for 2018.

However, Ms Sun said that HDB resale transactions with prices between S$800,000 and S$1 million have gone up, indicating that the supply of units in the market is sufficient to prevent stiff competition from driving the price of more units above S$1 million.

Overall, analysts said that HDB resale prices are on the uptrend and will increase by around 1.5 per cent to 3.5 per cent for the whole of this year.

Ms Wong Siew Ying, head of research and content at property agency PropNex, said that HDB resale prices have probably bottomed out and that the market has turned a corner.

Prices have been generally falling steadily since 2013 when the mortgage servicing ratio was introduced. It caps the proportion of a homeowner’s monthly income that goes into repaying his mortgage at 30 per cent.

For the whole of last year, HDB resale prices went up 0.1 per cent.

Analysts gave several reasons as to why the market will continue to be upbeat.

Mr Nicholas Mak, head of research and consultancy at property firm ERA, said that a higher proportion of newer flats are being transacted, typically defined as those with at least 90 years remaining on the lease.

These include HDB flats that have recently completed their five-year minimum occupation period.

“These newer flats would usually command higher prices than the older flats in the vicinity,” he said. 

Ms Sun of OrangeTee said that many of these buyers are young couples.

“These buyers have immediate housing needs and are not able to wait for the longer completion period for the newly launched BTO (Build-to-Order) projects, where some are slated to be completed only four to five years later,” she said.

Mr Mak said that this is further exacerbated by the Covid-19 pandemic, with buyers uncertain about when BTO projects can be completed since many construction workers are confined to foreign worker dormitories.

The economic downturn could have led some property hunters, who might have thought of upgrading to a private condominium, to turn to the HDB resale market instead, Ms Wong of PropNex said.

Housing grants introduced last year and low interest rates have also helped build momentum in the market, she added.