SINGAPORE — In a record-breaking transaction that has set a new benchmark in the Housing and Development Board (HDB) resale market, a premium five-room flat at Margaret Drive has been sold for an unprecedented S$1,725,888, real estate company ERA announced in a press release on Monday (July 22).

But property analysts whom TODAY spoke to expressed concerns about the potential for misperceptions stemming from publicising such record-breaking one-off sales, warning that these outliers could lead to unrealistic expectations among homeowners and buyers who might believe such prices are reflective of the overall market.

This sale surpasses the previous highest HDB transaction of S$1,588,000 recorded just last month of a five-room flat located at City Vue@Henderson.

The Margaret Drive corner unit is 3.5 years old, spanning 111 sqm (or 1,194.79 sqf), and is near the prime Dawson estate. Located on the 45th floor, the unit also boasts a higher ceiling alongside a balcony, with a remaining lease period of 96 years.

In response to TODAY's queries, ERA's key executive officer Eugene Lim said that the agency issued the media release because it felt the deal was newsworthy, disagreeing that it fanned the flames in the resale market because "it is a known fact" that million-dollar HDB deals are in the super minority.

"We believe most people including our Government will be able to see that such deals are outliers and not the norm," Mr Lim said.

According to ERA's press release, the unit belonged to a local Singaporean family who were selling in order to upgrade to private property, while the buyers were a local Singaporean family with young children.

"The seller had initially set a high selling price of S$1.838 million and despite the high asking price, the property saw competitive bidding between two sets of very keen buyers (resulting) in a final closing price of S$1,725,888," ERA said.

SHOULD HOMEBUYERS AND THE GOVT BE CONCERNED OVER RISING PRICES?

With regard to rising prices in the resale market, property experts voiced concerns over the affordability of HDB flats in the future.

Mr Alan Cheong, executive director for research and consultancy at property agency Savills Singapore, said that it would be "a sad day if prices of HDB flats were to converge with ECs (executive condominiums) and the lower spectrum of private properties one day".

Mr Cheong added that just one or two high-priced transactions would be enough to raise expectations among the public that their flats are now worth much more. "Property prices play games on the minds of the people," he said.

Mr Luqman Hakim, chief data and analytics officer at real estate outfit 99.co, said that the rate of increase of home prices has slowed to 5.8 per cent in 2023 as compared to 9.4 per cent in 2022 and 13.3 per cent in 2021, according to the firm's data. 

Despite this, Mr Hakim pointed out that the rate of increase of home prices is still faster than the rate of household income growth at 2.8 per cent as reported for the year 2023, which may lead to homebuyers being "worried if they or their children could afford flats in the future".

Mr Nicholas Mak, chief research officer at property technology company Mogul.sg, believes that announcements of such record transactions go against the Government's efforts to cool the property market.

"Highlighting the transaction of million-dollar record resale price is against the interests of HDB flat buyers, especially those with limited budgets. It is also fanning sentiments in the Singapore housing market to overheated levels," he added.

On whether the Government will further implement cooling measures to tackle rising prices, Mr Hakim said: "I think the Government still has a number of policy tools in their toolbox to further rein in prices, but they are probably waiting to see how a trifecta of past and recent cooling measures, current global economic uncertainties and still-high interest rates affect the property sector before making further moves."

Mr Mak said that while the Government has attempted to cool the market by setting a limit on the asking prices of resale flats listed on the HDB resale portal, it is unable to "moderate the irrational exuberance among some property buyers and sellers".

"(The announcement by ERA) is also daring the Government to implement more property cooling measures," he added.

CAN A S$2M HDB RESALE BE EXPECTED BY THE END OF 2024?

Despite the latest sale hitting a record high in the resale market, experts believe that the likelihood of a resale flat reaching S$2 million by the end of 2024 is unlikely.

Mr Cheong said there is probably a 40 per cent chance of this happening, but added that prices may surpass this figure in 2025 at the rate they are rising.

That said, he pointed out that such record prices are typically seen only for the choicest of HDB units located in central areas like Margaret Drive for now and in the coming few months.

Agreeing, Mr Hakim said that the latest sale is an outlier given how it is an 8.9 per cent increase in price from the last HDB all-time high in June. "(It) may be due to the 'heat of the moment' when the bids played out. As we sometimes experienced, some competitive bids do get out of hand and buyers tend to overbid and overpay," he said.

Mr Lee Sze Teck, senior director of data analytics at property agency Huttons Asia, warned that while the sale may be an outlier now, it could spark a trend of rising prices.

"For example, the first HDB flat to reach S$1.5 million was an adjoined flat at Moh Guan Terrace in June 2023. In the first six months of 2024, another 11 flats were sold for S$1.5 million and more," he said.

If such high transaction prices become more common, Mr Cheong said that resale prices of private residential properties may increase "because the gap would have closed between (the public) and private market".

Mr Lee added that this might also spur more buyers to buy quickly before prices rise further.

"From now to 2025, some BTO projects in Bidadari and Punggol will be eligible for sale and it is likely sellers will seek to sell at a million or more," he said.

Ultimately, Mr Lee said that government intervention is needed as such a trend could significantly impact housing affordability and market stability in the future. 

"In 2024, the number of million-dollar flats may reach 3 per cent to 4 per cent of total market volume. The Government should intervene before such transactions reach 10 per cent of total market volume."