Rising HDB Home Prices: What's Driving Them and What It Means for the Market

HDB resale prices continue their upward climb, with the Housing & Development Board’s Resale Price Index reaching 192.9 in the third quarter of 2024—up 2.7% from the previous quarter. Resale transactions also surged by 10.7%, with 8,142 cases recorded, marking a significant 21.6% increase compared to the same period in 2023.

So, what’s driving this demand in the HDB resale market when many first-time buyers are opting for Build-To-Order (BTO) flats, and private homeowners looking to downsize are often subject to the 15-month wait rule? Could it be elderly private homeowners or those seeking more space but unable to afford private condominiums?

While we don’t have specific data to test the hypothesis of ageing private owners, data from DataSense provides some interesting insights into the behaviour of potential upgraders. As of September 2024, 80.1% of property seekers browsing HDB listings were exclusively looking at HDB flats (Figure 1).

Figure 1: Percentage of Property Seekers looking for HDB apartment for sale only looked for HDB apartments for sale

Only 19.9% of property seekers were also exploring other types of housing. Among them, 7.78% browsed condominiums for sale, and 2.12% looked at private apartments. This aligns with the percentage of HDB flats that have crossed the million-dollar mark in resale prices, suggesting that upgraders might be targeting the high end of the HDB market but less so the middle and lower tiers.

Now that we have some clarity on who is driving demand, let’s address the why. Despite seasonal fluctuations, the demand for resale flats has remained relatively stable since July 2023. The key factor keeping prices high is the tightness in supply. But how is supply tight when HDB has ramped up BTO launches in recent years?

The answer lies in working back the supply of new HDB flat completions five years ago . Data shows that fewer HDB flats are being listed for resale, with our Supply Index indicating a steady decline in listings (Figure 2).

Figure 2: Demand (Views weighted by Interaction with listings) and Supply (Number of Listings) of HDB flats in Singapore

A major reason for this drop is the lower number of flats reaching their Minimum Occupation Period (MOP). By examining the completion dates of HDB flats, we can estimate when they will enter the resale market—typically five years later. The sharp drop in completions in 2018 and 2019 (Figure 3), combined with steady demand, means fewer resale flats are entering the market.

Figure 3: HDB completions

Looking ahead, the market is likely to tighten further in 2025 and 2026 as the effects of COVID-19 disruptions will be felt in the form of even fewer completions reaching MOP. In short, HDB resale prices are unlikely to come down anytime soon unless there is a significant economic downturn or major policy intervention.

The broader implications? While tight supply supports prices, it could also make it harder for potential buyers—especially those looking for affordable options—to enter the resale market. 

As we head into 2025, navigating these dynamics will be crucial for both buyers and policymakers.

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