HDB Upgraders Begin Boosting New Condo Sales, But Resale Condo Sales Dip in Volume

It’s sort of expected that we’ll see a lot of upgraders (from HDB to condos) in 2020, but the trend seems to have already started toward the end of last year. New condo sales are on the rise, as more Singaporeans move from neighbourhood coffee shops to poolside dining. At the same though, the sales volumes of resale condos have taken a dive:

Over 10,100 new unit sales were made by upgraders in 2019, and we’ll likely see more in 2020

In 2018, the number of new condos sales by upgraders were around 8,800. But last year, that number had risen to over 10,100; an increase of almost 15 per cent.

This is significant given the impact of the most recent cooling measures. Notably, private home buyers can only secure 75 per cent financing for their properties, down from 80 per cent – this comes to an additional down payment of around $50,000 to $60,000.

The trend is likely to strengthen going into 2020. This is, firstly,  because 2019 was a year of attractive condos – Parc Komo in Changi, for instance, is a freehold development priced at around $1,530 per square foot; far below the $1,700+ range that’s largely expected of freehold properties.

We also saw a lot of smaller units that came at a very low quantum – Midtown Bay, for instance, is a condo along Beach Road that starts from just $1.38 million (contrast this with the prices of the next two condos we’re about to mention, which are in Tampines and Punggol).

Treasure@Tampines is within a mature estate, with sizeable three-bedroom units going at around $1.4 million. As for Executive Condominiums (ECs), Piermont Grand had the luck to be the only EC launch the entire year, starting at around $800,000.

Overall, last year saw unusually strong offerings, with developments in good locations going at surprisingly low prices.

Second, there are a record number of HDB flats reaching their Minimum Occupancy Period (MOP) in 2020 to 2021.

The estimated number is 50,000 units; in contrast, the previous batch that hit MOP in 2013-2014 numbered around 9,000. As it’s not uncommon for HDB dwellers to upgrade soon after the MOP, this could send a notable surge of upgraders into the private homes market.

On the flip side, sales volumes of resale condos have fallen despite climbing prices

Resale volumes fell by over a quarter (27 per cent) in 2019, compared to the year before. There were just above 9,000 resale condo transactions in 2019, compared to about 11,200+ units in 2018.

The reason is similar to the one we mentioned above: good offerings at competitive prices among newer condos, causing most buyers to go for new launches rather than resale units. And psychologically, most home buyers also tend to prefer new units. Given that the market was crowded with over 52 new launches in 2019, it’s not surprising that new condos stole the limelight from older resale units.

(Those 52 new launches, incidentally, put close to 17,000 new units into the market)

Nonetheless, the surge of new launches also helped to pull prices up (there’s a knock-on effect; prices of surrounding condos will also trend upward when a new, more expensive condo enters the area). Resale condo prices are up around 1.7 per cent across the board, with resale units in the OCR leading at a 2.3 per cent rise.

Do you think resale condo volumes will pick up in 2020? Voice your thoughts in our comments section or on our Facebook community page.

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