More HDB upgraders buying condos as resale flat prices rise

Some 7,169 buyers with HDB addresses bought new and resale private homes in the first three quarters this year.PHOTO: ST FILE

Updated from : The Straits Times, 15 Nov 2021

More Housing Board upgraders are snapping up condominium units in a buoyant property market, spurred by resale flat prices climbing faster than those for private housing.

The robust HDB resale market has enabled them to upgrade more easily to private homes.

Some 7,169 buyers with HDB addresses bought new and resale private homes in the first three quarters this year, a jump of over 21 per cent compared with the same period last year, said property consultancy JLL, citing transactions recorded in the Urban Redevelopment Authority’s (URA) Realis database.

This puts the number of new and resale private homes sold to HDB upgraders on track to surpass 2020 levels, with resales poised to hit a five-year high, analysts say.

A key driver is the rapid increase in HDB resale prices, which have risen at a faster rate than those of private housing over the past year, said Mr Nicholas Mak, ERA Realty Network’s head of research and consultancy.

Prices of HDB resale flats surged 9.1 per cent in the first nine months this year, compared with a 5.3 per cent rise in the URA price index for private homes.

As a result, many HDB flat owners are upgrading to private homes after having sold their flats for sizeable sums, said Ms Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie.

Underpinning robust resale flat prices is a recovering economy, low mortgage rates and fresh demand arising from construction delays to Build-To-Order flats.

As at Oct 31, 192 resale flats were sold for at least $1 million this year, a record high. In comparison, 82 such HDB flats changed hands for the whole of last year.

“Some are also buying now because they expect prices to head higher, in view of the recovering global economy and a declining supply of new condos,” added Ms Sun.

Resale condos proved to be more popular among HDB upgraders, with about 62 per cent of the 7,169 transactions falling in this category, according to JLL. This is because they are more affordable than new homes, noted Mr Ong Teck Hui, senior director of research and consultancy at JLL Singapore.

Citing caveats lodged in the first nine months this year, PropNex said 4,212 resale condo units were sold to buyers with HDB addresses, up 119 per cent from the 1,924 sold in the same period last year. There have been about 13,000 resale condo transactions this year.

Meanwhile, new condo units sold to HDB upgraders were up nearly 26 per cent for the first nine months, compared with the same period a year ago, said PropNex.

The number of private homes sold to buyers with HDB addresses has risen across the board, with the strongest sales growth in the $1.5 million to $3 million price range.

“This is more than twice the number from 2020, and has reached higher levels than that from 2017 to 2019,” said Ms Tricia Song, head of research for South-east Asia at CBRE.

In the first three quarters of this year, 4,967 private homes priced between $1 million and $3 million were snapped up by HDB upgraders – a 109 per cent increase year on year, according to JLL.

“This is indicative of a recovering market after the severe recession in 2020, and also due to support from the HDB resale market,” Mr Ong said.

“The aspiration to own private homes among HDB residents is longstanding. The 2018 cooling measures were imposed not to dampen that aspiration, but to slow rapidly rising prices at that juncture.”

PropNex Realty chief executive Ismail Gafoor said the measures helped to cool new launch prices in the latter part of 2018, and helped upgraders with tighter budgets.

With the sweet spot pricing for HDB upgraders at between $1.1 million and $1.3 million, most are flocking to projects in the suburbs, or outside central region, analysts say.

Projects such as Treasure at Tampines and Midwood were popular options, while Normanton Park in the city fringe had the most buyers with HDB addresses, they said.