Larger HDB flats take a hit from September cooling measures

Prices for executive flats dipped 1% MoM, the first time since July 2021.

The HDB resale market has started to feel the impact of the September cooling measures, with transaction volumes plunging 24.1% MoM and price growth cut by more than half.

The cooling measures were harsher towards the larger flats, according to Huttons.

In October, prices of executive flats contracted by 1.0%, marking its first decline since July 2021. Five-room flats, meanwhile, saw flat growth in October.

“As anticipated, the biggest flat types experienced the most significant impact,” said OrangeTee, adding that demand for bigger flats may also experience a temporary pullback.

“Some private homeowners may be put off by the long waiting period and no longer wish to buy a resale flat. However, some young couples or upgraders looking for resale flats may still purchase big flats when the prices moderate or stabilise,” OrangeTee said.

The pullback, however, can divert demand to 4-room and smaller flats, said Huttons.

OrangeTee echoed this, saying demand for smaller flats will likely rise, especially in mature estates, given that private homeowners above 55 years old purchasing smaller flats are not affected by the wait-out period.

Last month, a 4-room flat at Pinnacle@Duxton was sold for $1.37 million, making it the most expensive 4-room flat in Singapore to date. Including the 4-room flat at Pinnacle@Duxton, there were 40 million-dollar flats transacted in October.

One Global Group said the million-dollar flats were the key factor that drove up resale prices last month.

“Some of these million-dollar purchases may have been finalised before the introduction of the most recent wave of cooling measures and possibly only approved afterwards, which is likely why they were included in October's tally,” One Global Group said.

“As a result, the overall trend in resale prices and the momentum of million-dollar deals has not yet fully reflected the effect of the cooling measures,” it added.

In the upcoming quarters, One Global Group said the momentum of million-dollar deals will likely slow down.

“This will be a key factor leading to the eventual slowdown in the overall price change,” the expert added.

Huttons expects price growth in the HDB resale market to moderate to around 1% per month.