Is Now the Right Time to Buy an HDB Resale Flat?

Since the 3rd quarter of 2013, we have seen a 12.5% decline in the HDB Resale Price Index. More promisingly, however, HDB resale prices have strongly rebounded over the past two consecutive quarters.

price index hdb

The question now is whether the resale market has bottomed out and should you consider entering now to catch the uptrend? Here are six reasons why HDB resale prices are trending upwards and look promising.


1. WFH Has Exacerbated the Need for More Space 

Many industry analysts believe that the rise in the resale transaction volume and the corresponding HDB resale price index can at least be partially attributed to the increase in demand for bigger space in this current environment.

While working from home was required to keep businesses running during circuit breaker and to adhere to safe distancing measures, it will likely stay even after the pandemic. This means more families, especially larger ones with multiple working adults, will be seeking more space to be able to work from home. 


2. Pent-up Demand

During the initial months of 2020, uncertainties over the economic environment and jobs security, coupled with strict safe distancing measures meant that many likely held back on their home purchase decisions. 

As COVID-19-related restrictions were eased and people found firmer financial footing, they likely went ahead with their property purchase plans. As detailed in the table below, property transactions fell more than a quarter the first half of 2020 (Q1 and Q2 2020) compared to the second half of 2019 (Q3 and Q4 2019).

The large number of transactions in the last third quarter was likely a result of pent-up demand from previous quarters. 


1 – Room

2 – Room 

3 – Room 

4 – Room 

5 – Room 



Q2 2019








Q3 2019








Q4 2019








Q1 2020








Q2 2020








Q3 2020








*Includes Multi-Generation Flats  

Source: HDB Resale Applications


3. Rise in construction costs 

In May 2020, Minister for National Development Mr Lawrence Wong, mentioned that it would be inevitable the construction costs in Singapore would increase due to the COVID-19 testing regime that would be required on the workers in the industry. This additional cost incurred due to regulatory requirements would eventually be borne by consumers. 

These additional costs include, sending the workers for Rostered Routine Test for COVID-19 and improved standards in dormitories. The current construction cost for new private projects averages around $400 per square foot (psf). If we were to estimate the additional costs incurred to implement safe distancing management practices to be in the region of $50 psf, it would translate to $450 psf or an increase of 12.5% rise in the construction costs. For a $2,000 psf project, this would result in an increase of around 2% to 3% in the overall selling price. 

As the construction costs is set to increase for newer housing projects, the existing projects would also see a move up in the selling price to close the gap in the price difference between a new project versus a built project. This increase could be in the range of 2% to 3% for the resale market.   

Of course, these estimates are all speculative, but the rise in new home prices due to higher constructions costs is almost certain. 


3. More Access to Money

Over the last few months, the US Government introduced unlimited quantitative easing to support its economy against a potential financial and economic collapse due to the coronavirus, which led to a rise in unemployment and bankruptcies of businesses. The Federal Reserve (Fed) printed over three trillion US dollars since March 2020. The mind-boggling sum is more than what the Fed had printed combined throughout the past decade after the 2008 financial crisis. 

In Singapore, the government also had to tap on its reserves for around hundred billion dollars through four stimulus packages to aid businesses and households manage the economic impact of the coronavirus.   

This global money printing and stimulus measures has depressed interest rates to very low levels, just as it was starting to rise again. For borrowers, this presents an opportunity to invest with low-cost money pouring into the markets. 

Property as an asset class worldwide has seen an uptick in the past couple of months, as it is seen as a good hedge against this devaluation of currencies and induced inflation.  


5. Delays in BTO Construction Timeline

Another reason that experts have attributed to the rise in the demand for resale HDB flats, is due to the longer completion date for upcoming Build-to-Order (BTO) projects. In the previous August 2020 Sales launch, out of the 11 projects, 9 had an estimated waiting time of more than 40 months to even as high as 62 months for the UrbanVille@Woodlands project. 

HDB has announced most of its current projects will see a delay of around six to nine months in their completion date, due to the disruption caused by the circuit breaker in April to June. This could have prompted more first-time buyers and HDB upgraders to the tap on the resale market instead of enduring a longer waiting time for a BTO flat. 


6. Rise of Million Dollar HDBs 

From the first million-dollar HDB flat sold in 2012 at 149 Mei Ling Street to the recent 5-room flat sold at Ang Mo Kio, million-dollar HDBs have always been headline grabbing news. This has captivated Singaporeans, potentially setting a psychological benchmark for more costly HDB flats.  

These million dollars HDBs are usually big in size and are located in the central regions, offering a city skyline view. Additionally, these flats are also typically nestled next to public transport nodes and other public amenities. 

However, the volume of transactions crossing the million-dollars mark have always been under 80 units for the last few years, constituting to around 0.3% of the overall HDB resale volume

While growing in trend, million-dollar HDBs will largely still remain an outlier rather the norm. The reason being, the loan for HDBs are based on Mortgage Servicing Ratio (MSR) of 30% rather than the Total Debt Servicing Ratio (TDSR) of 60% that is used for private homes. This means, the buyers of a million-dollar HDBs, can only use a maximum of 30% of their gross monthly income to service their property loan. Hence, these buyers could either be cash rich or private home down-graders.   


Could 2021 Be the Year to Buy A Resale Flat? 

If one were in search for a home, then now does seem an opportune time to make the investment. The government has offered generous resale home grants for first-time buyers, making it even more affordable. Moreover, with affordable financing offered by private banks, borrowers are able to make large savings on their mortgages should they pick the best loan package based on their needs and ability. 

If you’re ready to take the leap, why not browse HDB resale flats on PropertyGuru, or compare home loan interest rates on PropertyGuru Finance? Good luck! 


For more property news, resources and useful content like this article, check out PropertyGuru’s guides section


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