Record annual growth driven by bidding wars and high cash offers for popular flats
Resale flat prices in Singapore soared by 12.7% in 2021, recording the highest annual growth in over a decade, according to data from the Housing and Development Board (HDB) released on January 28. This growth was notably driven by fierce bidding wars and high cash offers for popular flats, with some buyers paying above market valuation for desirable properties.
In the fourth quarter of 2021, resale prices increased by 3.4% compared to the previous quarter, slightly exceeding the initial flash estimate of 3.2%. The resale price index, which tracks general price movements in the resale public housing market, rose to 155.7 in the fourth quarter, up from 150.6 in the third quarter.
Despite this price surge, resale transactions declined by 5.8% from 8,433 in the third quarter to 7,940 in the fourth quarter. However, compared to the same period in 2020, fourth-quarter resale transactions were up by 3.9%. For the year, resale transactions increased by 25.3%, reaching a total of 31,017 cases.
Four-room flats remained the most sought-after, with 3,347 applications in the fourth quarter, followed by five-room flats (2,085 applications) and three-room flats (1,785 applications).
Several factors, including optimism surrounding COVID-19 vaccines, a positive economic outlook, and a low interest rate environment, contributed to the strong demand for HDB resale flats. Additionally, delays in Build-to-Order (BTO) flat construction led many buyers to turn to the resale market for quicker options.
Notably, the number of million-dollar flats sold in 2021 reached a record high of 259, up from just 82 in 2020. In response to the overheated market, the government introduced cooling measures, such as tightening the loan-to-value limit for HDB housing loans from 90% to 85%, and plans to increase the public housing supply over the next two years to meet strong demand.
HDB also announced plans to launch up to 23,000 flats per year in 2022 and 2023 across both mature and non-mature towns. In February, 3,900 BTO flats will be offered in areas like Geylang, Kallang Whampoa, Tengah, and Yishun, followed by another 5,200 to 5,700 flats in May.
On the rental side, the number of approved applications to rent out HDB flats rose by 1.3% in the fourth quarter, though the total number of rented flats decreased slightly by 1.3% from the previous quarter.
