The Curious Case of Rising Resale HDB Prices

Year: 2021


In the past few months, the media has been abuzz over a recent sharp rise in the prices of resale HDB flats, with a record-high 23 resale HDB flats selling for over S$1 million each in February 2021. Significant movements in the HDB market are always a cause for discussion, so in this article we want to explore:

  • Are the recent rises in resale HDBs prices really so unusual?
  • What are the underlying reasons for the price increase?
  • Can we expect resale HDB prices to increase further over the next few years?

How Unusual are the Recent Price Rises?

As shown in Figure 1 below, resale HDB prices were stagnant from 2015 to 2019, but experienced a sudden uptick of 5% during 2020. While this recent price increase is not historically exceptional – by comparison, there was a much sharper and sustained price surge between 2007 and 2012 – it is unexpected and noteworthy, given that Singapore is currently in the midst of a pandemic-driven recession.

Figure 1: Resale HDB Price Index (Source:

Why Have Resale HDB Prices Gone Up?

In terms of the supply of resale HDB flats, this is largely determined by the number of HDB units reaching their five-year minimum occupation period (MOP) – i.e., the point at which an owner can legally sell their flat and place it on the market.

Based on statistics compiled by PropertyGuru, the number of HDB flats reaching MOP have in fact increased significantly over the past few years, which one would ordinarily expect to place downward pressure on resale HDB prices due to the increased supply.

Figure 2: No. of HDB Units achieving 5-year MOP (Source: PropertyGuru)

That prices have risen despite an increase in supply suggests that demand is the driving factor. Five demand-side factors are examined below.

 1. Middle-class household incomes have been relatively unaffected by COVID-19

Largely due to the ongoing Covid-19 pandemic, the median household income from work decreased by 2.5% between 2019 and 2020, following years of steady growth (Figure 3).

Figure 3: Median Monthly Household Income from Work (Source: SingStat)

Having said that, income derived from work for the middle-class (i.e. those who make up the bulk of resale HDB flat buyers) were relatively less affected in 2020.

As shown in Figure 4 below, those most affected by the pandemic-induced recession were at the extreme ends of household income levels – i.e. those within the bottom two deciles and the top decile. Meanwhile, those in the middle – between the 5th decile to 6th decile – were affected the least.

Figure 4: Real YoY Change (%) in Household Income (Source: SingStat)

 2. Interest rates are at historic lows

Expansionary monetary policy by the US Federal Reserve has contributed to historically low housing loan interest rates in Singapore (2.84% for a 15-year housing loan in 2020)* as reflected in Figure 5. Low interest rates for housing loans have in turn incentivised property purchases by reducing long-term mortgage repayments.

*Housing loan interest rates are pegged to the Singapore Interbank Offered Rate (SIBOR), the benchmark interest rate at which Singapore banks lend each other money. In turn, the SIBOR is affected by US Federal Reserve policy based on the following chain of events:

  • Expansionary monetary policy by the US Federal Reserve increases the supply of money, some of which flows out of the US economy.
  • This increases the supply of money globally and reduces the cost of lending out money, contributing towards a reduction in global interest rates, including in Singapore with the SIBOR.

Figure 5: 15-year Housing Loan Interest Rate (Source: Monetary Authority of Singapore; average rates compiled from quotes by 10 leading banks and finance companies)

 3. Private condominium prices have increased in recent years

Prices of private condominiums – one of the main alternatives for home buyers to HDB resale flats – have increased significantly over the past several years, with a compound annual growth rate of 4.2% between 2017 and 2020.

This has contributed to a divergence in the return rate on private condominiums versus resale HDB flats. This may have made resale HDB flats a more attractive (i.e. affordable) option for buyers than private condominiums.

Figure 6: Price Index of Resale HDB Flats vs Private Condo (Source:

While the statistics for nationwide price trends of new Build-to-Order (or BTO) HDB flats are unavailable, analysis by suggests that the regulated price of BTO flats often follows the price trend for resale HDB flats in multiple neighbourhoods. This suggests that prices for BTO flats are not significantly affecting resale HDB prices.

 4. Home buyers’ attitudes towards resale HDB flats have changed

Property market analysts have noted at least two changes in buyer preferences that have contributed to rising demand for resale HDB flats:

  • Many young couples prefer not to wait more than five years for the completion of new BTO flats
  • Some Singaporeans may have downgraded from private condominiums given the prevailing economic uncertainty

 5. Current and anticipated future property cooling measures also have an impact

Property market analysts have also noted that cooling measures on private property – such as increasing stamp duty for investors and foreigners, tightening mortgage terms, and increasing the minimum home size for new developments – may have increased demand in the resale HDB market in the short term.

Furthermore, there has been speculation of similar cooling measures being introduced to target the HDB residential market in the near future. As such, it is reasonable to suggest that some buyers may be trying to pre-empt such moves with their recent purchases.

Is the Trend of Increasing Resale HDB Prices Set to Continue?

It remains to be seen whether resale HDB prices will continue to rise over the next few years. Or, indeed, if they will be allowed to continue to rise. While household incomes are expected to rebound post-pandemic, and interest rates are expected to stay low for an extended period of time, government-imposed property cooling measures may kick in should the market be deemed “too hot”.

Ultimately, a perennial dilemma exists for policy makers:

  • If property prices rise too quickly, home ownership may become more and more elusive for first-time buyers, especially those with lower household incomes.
  • If a crash occurs, the majority of Singaporeans (approximately 70% of whom own HDB flats) will see a reduction in personal wealth.

Balancing the two sides of this coin will be a delicate and pressing challenge for policy makers. Given the centrality of home ownership within the national growth compact, as well as the sensitivity of government policy towards popular concerns, it is likely that calibrated government intervention will help manage resale HDB prices, such that they continue to grow on a somewhat stable, slow upward trajectory over the years to come.


Lim Chern Yuen is a Senior Associate Consultant and Economist at the Future-Moves Group. He is a graduate of the University of Oxford and contributes to the firm’s thought leadership pieces related to developments in public policy and economics.

Disclaimer: The views expressed in this article are those of the writer and do not necessarily represent those of Future-Moves Group. Additionally, this article is based on personal opinion and experience and should not be considered professional financial advice. Prior to making any investment or entering into any transaction, you should carefully consider your financial situation and consult your financial advisor(s) in order to understand the risks involved and to ensure the suitability for you of any investment or transaction.