Are Million-Dollar HDBs here to stay for long?

In 2021, the HDB resale market posted a decade-high growth in prices amid robust housing demand - buoyed by low interest rates, pent-up demand and concerns over completion delays of new flats.

HDB resale prices grew by an impressive 12.7% in 2021, sharply higher than the 5%

price increase booked in the previous year. Some nine months into 2022, that record has already been breached. Transaction data showed that the number of million-dollar HDB resale flats – as they have come to be called – have hit 277 units in the year-up-to-30th September period, on track to surpass the 300-mark this year.

On 29th September 2022, the government had announced a new round of cooling measures to cool demand for housing, especially for HDB resale flats. Amongst them, a 15-month wait-out period for current and former private property owners who intend to buy a non-subsidised HDB resale flat after selling their private home.

Now let us look at some interesting fact findings about the Million-Dollar HDBs!

Attributes of Million-Dollar HDB Flats

Profile of Million-Dollar HDB Flat Buyers

Level of Competition Among Buyers

Despite an asking price of at least $1 million, findings showed that some 60% of the million-dollar resale flats transacted have garnered two or more firm offers from interested parties. It was found that amongst the flats which had received at least two offers, the buyers have paid a higher cash over valuation (COV) of above $50,000 to secure the unit. Furthermore, amongst the buyers who had paid a COV for the million-dollar flat, a sizable portion (48%) had cited downgrading as a reason for purchasing the flat. Meanwhile, about 27% of the buyers did not pay any COV for their flat purchase, according to survey respondents.

Chart: Cash over valuation range and % of buyers who falls under each range

Conclusion: Million-Dollar HDBs are here to stay

Million-dollar HDB resale flats have generated much hype, frequently rewriting records this year – touching new highs in both transaction number and price – as well as setting several firsts, such as popping up in non-mature towns like Bukit Batok and Punggol.

At a time when home prices are climbing, these HDB resale flats may seem like a bang for the buck particularly when compared with private condos. Respondents have pointed out in the survey, that some buyers have purchased a million-dollar resale flat as they were unable to find an apartment with the same attributes in the private residential market that would also fit their budget.

5-room and executive flats accounted for about 90% of million-dollar resale flats. The new wait-out period is expected to soften the demand for such flats as private home downgraders will have to sit out for 15 months – perhaps renting in the interim – before they can buy them. This, in turn may help to keep prices in check. While their transaction numbers may slow slightly, million-dollar HDB resale flats – given their attractive attributes – will remain sought after by Singapore households.