Why Are There More Million-Dollar HDB Resale Flats These Days?

Singapore’s resale flat market has seen a surge in million-dollar transactions, driven by high demands, prime locations, and unique renovations. The resale market, which operates on an open supply and demand concept with no government-imposed caps, allows HDB flats to be sold at any price as long as the buyer is willing to pay.

This dynamic resale market presents opportunities and challenges for both buyers and sellers. For prospective buyers, navigating this expensive market requires careful planning and strategic decision-making to land themselves the best deals available. In this article, we will look at the reasons for the increase in million-dollar HDB resale flats and how potential buyers can prepare themselves for this market. 

Why are there so many million-dollar HDB resale flats? 

While prices of resale flats rose by only 4.9% in 2023, compared to a 10.4% increase in 2022 and a 12.7% gain in 2021, the number of million-dollar HDB resale flats that exchanged hands have increased. Just in January 2024, there were 74 of these million-dollar resale flats sold, compared to 430 of such transactions across the whole of 2023, and 369 in 2022.

Many of such million-dollar flats are located in mature estates, but the demand for non-mature estates is also on the rise, making it hard to predict which areas will see the boom of property prices next. However, the rise of million-dollar HDB resale flats boils down to the following reasons.

Prime Locations

Many of these high-priced flats are located in prime areas such as mature estates, or near MRT stations. The top three HDB towns with the greatest number of million-dollar flats in 2023 were Bukit Merah, Toa Payoh and Kallang/Whampoa, highly sought-after for their central location, larger flats, and/or accessibility.

Shorter Waiting Time

Compared to getting a Build-To-Order (BTO) flat, resale flats have a much shorter waiting time. During the COVID-19 pandemic, the waiting time for a BTO flat averages around five years, and while the waiting period has since dropped to slightly less than four years, a resale flat can exchange hands within four months. 

BTO ineligibility 

Singles are only allowed to apply for a 2-room flexi BTO flat, leaving them ineligible to get bigger apartments via BTO. High-earning couples might also not be eligible to apply as their combined income hits the income ceiling for BTO flats. Those who are not eligible to apply for BTO flats turn to the resale market to address their needs, driving up the demand for such apartments. 

Unique Features

Certain HDB flats, such as those in the Pinnacle@Duxton, offer unique architectural designs, sky gardens, and other premium features that are not readily available in typical HDB developments. These unique features drive up demand and prices.

Supply Scarcity 

The limited supply of larger HDB flats, such as Executive Apartments (EAs), Executive Maisonettes (EMs), and Design, Build and Sell Scheme (DBSS) flats, contributes to higher prices. Some of the older HDB flats are also bigger than their new Build-To-Order (BTO) versions, making them more enticing for families. 

Flats’ Age and Condition 

Many of the million-dollar flats are sold fairly soon after their Minimum Occupation Period (MOP) of five years. This can cause the flats to command a higher selling price as it gives the new owners a longer time with their HDB apartments, which have a 99-year lease. 

Flats that have been well-maintained or recently renovated can also fetch higher prices. Buyers are often willing to pay a premium for move-in ready flats with modern interiors and amenities.

Future of the HDB Resale Flat Market

While million-dollar HDB resale flats may become even more common in certain desirable locations, it is unlikely that they will become the norm across Singapore. With more BTO units made available, it can help Singaporeans secure an apartment in their desirable locations with amenities that they prefer. 

Furthermore, to curb the rising costs of resale flats, the government had also introduced various property cooling measures.

To control the demand in the HDB resale market, the government introduced a 15-month wait-out period for private homeowners buying non-subsidised HDB resale flats. The rule only kicks in after they sell their private property. 

The loan-to-value (LTV) limit for HDB loans is also lowered from 85% to 80%, reducing the maximum amount home buyers can borrow from HDB. Other measures include increasing the Additional Buyer’s Stamp Duty (ABSD) rates and tightening the total debt servicing ratio threshold.

What can potential homeowners do to prepare for the costs of owning a home? 

Regardless if you plan to buy a BTO flat, resale apartment, or private condominium, buying a house is expensive. Saving for a house in Singapore requires careful planning and discipline from both partners and leveraging the various financial tools available. 

Setting clear financial goals is important early in the planning process. Assess the type of property you want to buy and its costs, and remember to factor in additional expenses such as stamp duty, legal fees, renovation costs, and moving expenses. Calculate the down payment needed and set a realistic savings target and timeline.

Creating a savings account with your spouse is also a great way to start saving up for the house. Set up automatic transfers from your salary account to the dedicated savings account to ensure consistent savings. Learn more about high-interest savings accounts that you and your spouse can leverage on. 

Learning how to invest is also a great way to grow your savings. Through investing, you can make money via investment appreciation, interest payments, and dividends. However, investments come with risks, and higher returns typically signify higher risks of losing your money. 

Your Central Provident Fund (CPF) Ordinary Account (OA) can also be used for your down payment and monthly mortgage repayments. With a current base interest rate of 2.5% per annum, the CPF OA interest is much higher than the banks’ usual savings rate of 0.05%, so you can make voluntary contributions to your CPF to boost your savings. 

In Conclusion

Million-dollar HDB resale flats are here to stay. Thankfully, they do not make up the bulk of the resale flats available. There are still plenty of available apartments up for sale way lower than the million-dollar price tag.  

Understand what are your non-negotiables when it comes to buying your new property and work your way around your budget to best pick an apartment that suits your needs. 

By assessing your finances, understanding the market, maximising available resources, and leveraging professional expertise, you can make informed decisions and secure a property that meets your needs and budget.

Ready to purchase your next home? Check out the best housing loans available in the market today!

Read More:

• Buying A BTO Flat In 2024? Here’s A Complete Cost Breakdown
• Resale vs BTO Flats: Which Is More Worth Your Money?
• Home Mortgage Loan Basics: How Much Can I Borrow?
• Average Cost of Home Renovation in Singapore
• How Much of Your Income Should You Spend on Housing?

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