Decline in Condo Transactions as Market Faces Increased Costs and Stricter Affordability
In the first three quarters of 2023, the number of private condominiums purchased by Housing and Development Board (HDB) upgraders dropped significantly by 50.1%, with only 3,876 units sold compared to 7,766 units in the same period a decade ago. The slowdown in demand is attributed to several factors, including the introduction of higher additional buyer’s stamp duty (ABSD), rising mortgage rates, and surging private home prices.
Despite the decline in volume, HDB upgraders have been purchasing more expensive condos. In particular, transactions worth S$2 million or more surged by 86.3% to 732 units compared to 393 units during the same period in 2013. This indicates that a larger proportion of HDB upgraders are opting for higher-end properties, with 18.9% of condo purchases in this price range, a significant increase from 5.1% in 2013.
The rise in mortgage rates, which have climbed above 4%, coupled with the increase in living costs, has resulted in steeper monthly payments for homeowners. These factors have reduced the affordability threshold for potential homebuyers, limiting the upward potential for housing prices. OrangeTee predicts moderate price growth for the remainder of 2023, estimating an increase of 4 to 5.5% for the year. Overall sales volume, excluding executive condominiums, is expected to fall between 17,000 and 19,000 units in 2023, down from 21,890 units sold in 2022.
