The most expensive resale apartment this year is a five-room unit at Skyterrace @ Dawson sold for $1.42 million

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Read more: Seven sites on the Confirmed List and nine sites on the Reserve List were made public by the government

Seven sites on the Confirmed List and nine sites on the Reserve List were made public by the government

HDB prices for resales continued to increase throughout 2022, despite concerns about affordability of housing in addition to government interference.

The largest price and demand increases were seen in non-mature estates, such as Bukit Batok Sembawang, Yishun, Woodlands along with Jurong West, says Christine Sun who is the senior vice-president for analysis and research for OrangeTee & Tie.

“There were buyers searching for affordable apartments within non-mature estates. While the prices for flats within these regions have increased however, they are still cheaper when compared with resales of apartments in estates that are mature,” she adds.

The growing acceptance of hybrid work arrangements as a result of the pandemic is a sign that more workers work at home remotely, according to Nicholas Mak, head of research and consulting of ERA Realty.

“As this is the case, some homeowners may want larger flats, however the overall availability of five-room flats on the market is still very low,” says Mak. At present, the government will not be offering 5 room BTO flats in estates that are mature Mak adds. “Hence those looking to purchase a five-room apartment in an older estate may go to the resales market, even if the prices are more expensive.”

BTO timelines delay buyers

The rise in resales of HDB prices in 2018 was also driven by a resurgence in the demand of buyers who were sceptical about the lengthy timelines for completion of projects for certain BTO projects.

As per Ismail Gafoor, CEO of PropNex Realty, most first-time home buyers usually try to buy an BTO flat because they are subventioned. “The market for BTO flats can be tough and new flats could require three to five years to build,” Gafoor says.

So, only those who do not have a requirement for housing will keep applying for BTO flats as their primary residence, according to Gafoor. If applicants fail repeatedly to get the BTO flat could decide to go to the resales market, he suggests.

Construction supply chain problems in the sector delayed the completion dates for a small number of BTO projects between the years 2020-2021. As per the official, the majority of these timeline issues were solved and the projects were in the right direction by the beginning of the year.

Furthermore the government also has made it a priority to use the BTO sales this year to highlight the speedier waiting times for certain BTO projects that are not in mature estates, according to Mak.

There are indications that the efforts of the government to attract more buyers from market BTO market are beginning to show results, according to Sun. “As prices for resales of flats have been rising while the authorities have announced additional BTO projects available for sale and we’ve witnessed more buyers turn toward the BTO market over the last few years,” Sun says.

The times to finish certain BTO projects in non-mature estates have slowed down to between three and 4 years. She states. This includes BTO initiatives located in Bukit Batok as well as Tengah.

In a rare step, HDB responded to rising concerns about affordability of housing in an announcement to the media this month. It emphasized its position that BTO Projects are priced to be affordable and follows an approach to pricing which is different from private developers in that HDB does not add the profit margin to the top of the cost for BTO projects.

Buyers resist COVs with high levels

The year also witnessed a increase in the number of flats resold that have a high cash-over value (COV). This is the difference between the price of sale of the flat that is being sold and its HDB appraisal.

As an example at the beginning of the year, a few buyers were paying COVs greater than $600,000.00 for flats that were highly sought-after in non-mature as well as mature estates. “Typically the highest COVs are noticed in flats with several buyers who are competing for them,” Gafoor says. Gafoor.

Mak states that the majority of the buyers willing to pay for the most expensive COV will be condo downgraders who have the cash to beat out first-time buyers.

In 2H2022, however resistance to price had begun to set in the homebuyers. In a letter to Parliament in 2018 Secretary of National Development Desmond Lee shared the fact that between January and October, the percentage of flats that were sold with COV decreased to one-in-four flats as opposed to one flat out of three flats being sold in 2021.

Others market watchers agree. “In all, the buyers appeared less inclined to pay for premium COV following in September of 2022 property cool-down measures” Sun says. Sun. She also says that a small number of buyers could also anticipate prices to decrease following the final cycle of property market restrictions.

The September regulations included increased stress-test rates to loan applicants according to Mak. This will soon restrict the amount of mortgage loan that buyers are able to obtain, and they must pay for the extra from their savings, Mak says.

The September legislation included the introduction of an 15-month waiting period for private property buyers who purchase a resales flat. “These downgraders typically have larger pockets and are able to pay more and COV for their preferred flats. If this group of potential buyers removed from our equations, it is possible that we may have COV dropping,” says Gafoor.

Flats influxing to MOP

Record-breaking 31,325 HDB flats is expected to be able to reach their minimum occupancy duration (MOP) in the coming year. The next year 15,784 flats are expected to hit MOP. This has led to an rise in the resales flat prices and, in particular, with more million-dollar flats being sold, according to Gafoor.

“Such MOP flats typically have higher prices due to their long balance leases and the better state in the apartment. The selling of these units has helped boost prices across the property,” says Gafoor.

For example, in Sembawang 3962 flats are expected to be able to attain their MOP by closing date of this year. Based on the data collected by PropNex 35% of five-room and four-room flats sold in Sembawang have a leases of over 94 years.

The average price for resales of five-room apartments in Sembawang has increased to $583,000 by 2022, rising 20.4% 20.4% from that of 2021 ($484,000). The prices of four-room apartments in the area have increased to $502,000 in 2022, a rise of 20.1% from that of 2021 ($418,000) Based on the PropNex study.

Record-breaking the number of flats worth a million dollars

A greater number of resales flats were purchased for more than $1 million in the past few years. In 2021, 259 flats that were resold changed hands with a minimum value of $1,000,000an all-time record in the last year.

“Most million-dollar flats transactions came through mature estates. From January 2012 until September 20, 2022 there was 13 flats purchased for at minimum one million dollars in estates that were not mature. This amounts to 1.6% of the total 838 million dollars of transactions reported during the period.” Sun states. Sun.

The record for 2021 was broken this year , when 342 million-dollar flats were sold by the end of November. Out of the 342 units sold the 323 flats (94.4%) are in the oldest estates, according to PropNex.

Based on HDB data on resales, which was collected on December 11th, the most expensive HDB resale transactions of the year were for five- and four-room and bigger flats.

For instance, the most expensive HDB sale this season was for an 1,313 square 5 ft unit with five rooms located at Skyterrace located at Dawson. The property, located in Block 92 is advertised as a luxury apartment loft and was sold for $1.42 million ($1,080 per square foot) in July of this year.

The sale is higher than the previous record-setting high in the block, which involved a fifth-floor premium loft unit that purchased at $1.33 million ($1,011 per square foot) in the month of December in 2021.

The second-highest resales took place in the adjacent City Vue @ Henderson which was the 1,216 square feet of five-room property. The flat, located in Block 96A, was purchased to a buyer for $1.4 million ($1,151 per square foot) at the end of May.

The sale was a result of a resale within the same block , where another five-room of 1,216 square feet was purchased at $1.38 million ($1,135 per square foot) during the same month.

In addition, the top units located at The Pinnacle at Duxton are continuing to draw some of the most expensive HDB price resales. The most expensive one was a 1,151 square feet five-room apartment in Block 1F , which sold for $1.39 million ($1,206 per square foot) in March.

The block also witnessed an auction of 1,200 square feet, four-room apartment at $1.23 million ($1,228 per square foot) in April of this year.

The million-dollar flats that are sold aren’t the sole reason for the “unsustainable price rise” on the HDB resale marketplace in 2022, claims Lee Sze Teck, senior director of research at Huttons Asia. “But they did contribute to the perception that flats were becoming unaffordable.”

This could have influenced the government taking action by imposing property cooling plans in the month of September says Lee.

Are the million-dollar flats worth it?

The majority of the flats which have gone over $1 million are in central areas close to amenities, especially MRT stations.

“Dawson, Henderson, and Toa Payoh are in the city fringe. Duxton is in the center of the city, close to the CBD. The flats have easy access to services and are in easy reach from The MRT station. These are excellent locational advantages,” ERA’s Mak.

OrangeTee’s Sun has a similar view and adds the fact that “many apartments might have high floors which offer great views. Certain flats are extremely spacious flats, and flats that are this size are not available anymore from HDB”.

Additionally projects such as The Pinnacle @ Duxton or Skyterrace @ Dawson can be considered iconic HDB developments featuring beautiful design, urban design and award-winning architecture Mak adds. Mak. For instance, Skyterrace @ Dawson and its architect, SCDA Architects, won the President’s Design Award for 2016. Skyterrace @ Dawson was described as an ideal model for the future of housing for the public in Singapore.

In the same way, The Pinnacle @ Duxton is a renowned public housing project located in Singapore. “With an array of attractive characteristics, it’s no surprise that these homes have price tags of millions of dollars,” says Gafoor.

The predominance of million-dollar flats in these areas could be due to the absence of private residential developments within the vicinity. A study by PropNex in September of this year revealed that certain buyers could not locate comparable alternatives on the market for private residential which met their needs and budget, so they decided to buy million-dollar flats.

“Given their central position and the size of the unit that a private condominium located in the same location is likely to be more expensive than million-dollar flats. So, aside from the appealing physical features of million-dollar apartments and the attractive location, we believe the absence of affordable private housing in these communities may be one of the factors which drove the the demand for these flats.” Gafoor says. Gafoor.

Conservative mentality that home buyers have

HDB prices for resales are anticipated to show a modest increase in 2023.

“Due to the rising rates of interest, a more hefty the stress test rate for loans, economic uncertainty in 2023 and the most recent cooling measures, homeowners may be less cautious” says the ERA’s Mak.

The expert adds that if resale flat prices keep rising as they do, home buyers’ monthly income might not be sufficient to be sufficient to get a loan for the flats they wish to purchase. “The anticipation of future rates of interest and economic uncertainty could trigger a more cautious mindset for buyers of homes,” he says.

Gafoor states Gafoor says that PropNex anticipates HDB price increases for resales of by 6% to 8% by 2023. This is which is down from its prediction of 10%-10% in 2022. Similar to that, Sun of OrangeTee & Tie expects the price to be moderate, at 5 to 8% next year.

For the November 2022 BTO sale launch in November 2022, HDB released 9,655 flats. The April 2023 as well as May 2023 sale exercise are expected to release approximately 8,200 to 9,200 flats sold.

This increased supply might aid in cooling HDB flat demand for resales slightly but it’s unlikely to alter the overall rate of growth of the resale marketplace in 2023, according to Gafoor. “We expect HDB prices for resales to show some slight gains in 2023, aided by demand from people who are first-time home buyers who have urgent needs for housing and buyers who want to upgrade their homes to a larger flat or move.”

Sun mentions that other variables can be more likely to dampen the demand for public housing like the local average unemployment rate, growth in income as well as economic growth and the overall economic situation. “For example, in the event that the employment rate remains high and income growth is strong, the increasing quantity of BTO flats might not reduce prices next this year.” She believes.

As the years progress in the near future, buyers are likely to be more careful when it comes to purchase of homes in the face of increasing interest rates in mortgage loan, the rise of inflation and economic headwinds, according to Gafoor. According to Mak that the property cooling measures announced in the months of December 2021 and September this year are likely to weigh on the market.