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Singapore’s Resale Condo Market : A Look at the Current Boom : The private resale condominium market in Singapore is experiencing a surge in popularity, defying the impact of high interest rates and various cooling measures implemented in the past. This renewed interest in resale properties is a significant shift from the market stagnation observed after the introduction of the Total Debt Servicing Ratio in 2013.
One of the key indicators of this market resurgence is the substantial increase in the volume of resale transactions.
Data from the Urban Redevelopment Authority (URA) reveals that between January and August 2024, there were 8,823 resale transactions, marking an 11% increase compared to the same period in 2023. This figure stands in stark contrast to the annual average of approximately 5,300 units sold during the same period each year from 2013 to 2017.
Furthermore, the market share of resale homes within the total private home transactions has grown significantly, reaching an impressive 72% in the first eight months of 2024. This represents a notable jump from the 58% recorded in the corresponding period of 2023. This trend further intensified in August 2024, with resale transactions accounting for 78% of the total.
Several factors contribute to this robust demand for resale properties. A primary driver is the significant increase in housing supply over the past two years, with nearly 30,000 private homes reaching completion. As this new housing stock becomes available for resale, it expands the range of choices for potential buyers, further fueling the growth of the resale market.
Another crucial factor is the relative affordability of resale properties compared to new launches. With new home prices remaining firm, buyers seeking more budget-friendly options are increasingly turning to the secondary market. Leasehold properties, slightly older units, and even older resale condominiums, often perceived as offering good value due to their spaciousness, are attracting considerable attention from buyers.
The preference for specific types of resale properties is also evident. Data from 2024 indicates that leasehold units dominated resale transactions, constituting approximately 60% of the total volume, while freehold units accounted for the remaining 40%. Within the leasehold segment, new condominiums aged between 10 and 15 years emerged as the most popular choice, capturing a 35% market share. Newly constructed resale properties less than 10 years old secured a 19% market share.
Interestingly, there has been a slight increase in the demand for older leasehold resale properties aged 30 years or more, with their market share rising to 11% in 2024 from 9% in the previous year. This suggests that buyers are increasingly recognizing the value proposition of older properties, particularly in terms of the spaciousness they offer at a given price point. This trend has led to a surge in the popularity of resale condominiums, especially larger units located in suburban areas.
Another significant contributor to the booming resale market is the influx of Housing Board (HDB) home upgraders. In the first eight months of 2024, HDB upgraders constituted nearly one-third of all resale home buyers (including both landed and non-landed properties), marking a 14% increase from 2023 and reaching a total of 2,750 units.
Several factors make resale condominiums an attractive option for HDB upgraders. They can move into their new homes immediately upon purchase without incurring the additional buyer’s stamp duty. Moreover, they can potentially avoid taking on a significantly larger loan compared to buying a new private property, especially if they sell their HDB flats before purchasing a resale unit.
The robust growth in HDB resale flat prices has also played a crucial role in empowering many flat owners to upgrade to private properties. In 2024, 5,036 HDB resale flats were transacted at or above $700,000, a substantial increase from the 3,517 units sold during the same period in 2023. This surge in sales is particularly striking when compared to the 1,057 transactions recorded during the pre-pandemic year of 2019. This price appreciation has provided many HDB owners with the financial capacity to enter the private housing market.
While the resale condominium market is thriving, landed properties have also maintained their appeal, despite experiencing price increases for eight consecutive years. The number of landed property transactions (excluding strata landed units) rose from 825 in 2023 to 989 in 2024.
Looking ahead, the outlook for the resale condominium market appears positive. Recent interest rate cuts by the US Federal Reserve are anticipated to provide a significant boost to the real estate sector in the medium to long term. A more favorable credit environment could potentially stimulate sales of luxury homes.
Furthermore, the projected decline in available housing stock for purchase in the next few years could contribute to price stabilization or even further growth in resale prices. The number of condominium completions, excluding executive condominiums, has already decreased from 19,968 units in 2023 to approximately 9,100 units in 2024. This downward trend is expected to continue, with completions projected to fall further to around 5,300 units in 2025 before experiencing a moderate rise to 7,800 units in 2026.
In conclusion, the Singapore resale condominium market is currently experiencing a period of robust growth, driven by factors such as increased housing supply, relative affordability, and a surge in demand from HDB upgraders. While potential challenges such as major economic crises or unforeseen circumstances could impact the market, the overall outlook remains positive, supported by favourable interest rate conditions and a projected decline in new housing supply in the coming years.