Million-dollar HDB resale flats facing downtrend

Pinnacle unit sold in March for record S$1.23m, but data shows downtrend as more supply comes on the market

Thu, Apr 09, 2020

Siow Li Sen


SOME HDB resale transactions continue to bust the million dollar price tag even as Covid-19 rages on, with one sold last month for a record S$1.232 million.

In March 2020, there were five HDB resale flats transacted for at least S$1 million, according to real estate portal SRX Property. Together with nine resales sold for at least S$1 million in January and February, a total of 14 units were transacted in the first three months of this year, double the seven in Q4 2019.

Last month's S$1.232 million resale is a 5-room unit with a floor area of 107 sq m at The Pinnacle@Duxton on the 40-42 storey with a remaining lease of almost 90 years.

Located in Cantonment Road, units at the 50-storey The Pinnacle@Duxton have featured regularly in transactions exceeding one million dollars.

In August last year, another 5-room unit also on the 40-42 storey, with a slightly smaller floor area of 106 sq m, sold for S$1.2 million.

Of the 10 resales of at least S$1 million, The Pinnacle@Duxton accounted for at least four, according to data crunched by Christine Sun, OrangeTee & Tie, head of research & consultancy. She looked at data for highest priced units on record from 1990.

While eye-popping resale deals continue to be done, Ms Sun said recent data indicates a downtrend as more supply comes on the market as well as alternative options in the similar price range.

Even with an HDB flat transacted for a record price last month, this may not indicate that many more flats could be sold for a million dollars and above, said Ms Sun.

"In fact, the number of million-dollar flat transactions has dipped from 72 units in 2018 to 64 units in 2019, " said Ms Sun.

In Q4 2019, only seven flats were sold for a million dollars and above, which was the lowest quarterly transaction since Q1 2017, she said.

"The lower number of million-dollar transactions could be attributed to the increased housing supply and more competition for potential buyers. There are also many housing options such as small condominiums and new executive condominiums priced at a similar price range," said Ms Sun.

Although 14 flats were sold for at least S$1 million in the first quarter of this year, which is double the seven in the previous quarter, she does not regard it as high.

"This is because the past two-year (Q1 2018 to Q4 2019) (quarterly) average was 17 units. 17 units were sold in the same period in Q1 2019."

"I think the numbers are too small to make a firm judgment but I would have expected the number to be higher in tandem with more flats reaching MOP (minimum occupation period)," she said.

"Moreover, many of these flats are DBSS units or flats located in estates along city fringes like Queenstown and Bukit Merah, and these flats typically command higher prices," said Ms Sun.

Design, Build and Sell Scheme or DBSS are non-standard fancier HDB flats designed, built and sold by private developers.

Last year, around 30,000 flats reached their MOP. This year, there will be 24,000, and 2022 is likely to have a bumper crop of 31,000 flats or more.

HDB flat owners have a five-year MOP before they can sell their units on the resale market.

The MOP is calculated from the date that owners collect the keys and excludes any period where the owners do not occupy the unit, such as when he or she is based overseas for work.

An increasing number of flats have reached their MOP in recent years.

The HDB had boosted the supply of new flats following a housing shortage, with more than 25,000 flats launched each year from 2011 to 2013. As a result, more than 80,000 flats will be eligible for resale in the coming three years, as these units reach their MOP.

"Therefore, we may not see an 'exponential increase' in million-dollar HDB units especially given the current macroeconomic uncertainties," said Ms Sun.