Million-Dollar HDB Resale Prices: Perception vs Reality

In recent years, media headlines have painted a picture of skyrocketing HDB resale prices, particularly focusing on the growing number of million-dollar transactions. Since 2021, the number of these million-dollar HDB resale flats has indeed increased, leading many Singaporeans to believe that public housing is becoming unaffordable for the masses. Despite government assurances that these transactions are rare, accounting for only about 2+% of all resale deals, the perception of unaffordable public housing persists.

This perception, fueled by sensationalized media reports, is causing unnecessary anxiety among potential homebuyers. Many residents equate a few million-dollar transactions with a systemic problem in public housing affordability. But does this view hold up against data? To quote Dr. Hans Rosling, it would be helpful for readers and policy makers to be factful about the topic before taking any action; Factful being "The stress-reducing habit of only carrying opinions for which you have strong supporting facts."

Did you know:

The first million dollar resale flat transaction was in 2012
As at Aug 2024, the number off million dollar HDB resale transactions have risen to 579, which makes up 2.9% of all resale transactions
The largest number of million dollar HDB resale transactions are in Bishan, Toa Payoh, Bukit Merah and Queenstown.
Most of the million dollar resale transactions are for large HDB units in excess of 120 sq m; which suggest that they exceeded the million dollar mark not because they were expensive on a dollar per square meter basis, but because they were large.
On a dollar per square meter basis, the prices of the million dollar resale units overlapped the prices for sub-million dollar resale units.

Affordability of Resale HDB flats

The 2024 Propnex survey on Housing Aspirations of HDB flat owners showed that only 17% felt that HDB resale prices were affordable and 45% felt it was unaffordabe (37% were neutral to the topic of affordability). And only 23% of the respondents were considering upgrading to HDB resale flats. The term "affordability" has been loosely used in the conversation and in the articles. True affordability can be measured by comparing the price of a home to a household’s annual income. When we dig into the data, we see that while HDB resale prices have increased over the past 20 years, household incomes have grown at a faster pace.

For purposes of this article, we will be express median HDB resale prices as a multiple of annual household income, assuming 13 month pay including annual wage supplement.

Using 3 room and 4 room HDB resale units, the most common flat types in Singapore, for illustration, the median resale price of a 3 room flat is 2.76 years of income in 2023, it cost the same 2.76 years of time in 2000; while the median resale price of a 3 room flat is 3.89 years of income in 2023, it costs 4.44 years of income in 2000. On this basis, it suggest that HDB resale prices are just as affordable for 3 room flats and even more affordable for 4 room flats compared with 2000. But some might argue that median household income may not be a fair comparison, since HDB flats while ubiquitouis in Singapore, were originally intended to house the lower income groups.

The above chart shows the years of income it would take to puchase 1 to 4 room hdb resale flats at median prices for the bottom decile to the 5th decile of household income. Data suggests that

HDB resale flats remain out of reach for only those in the lowest decile of household income
The 2nd Decile (11th to 20th percentile in household income) can potentially afford a 3 room resales HDB flat. Bearing in mind that today's home loans are typically between 20 to 30 years long, it would take them 6.1 years of their annual income. Bearing in mind that it would only have cost them 5.35 years of income in 2000. It has become more expensive, but not out of reach.
Those in the higher household income deciles should be able to afford resale HDB flats.

While the data shows that HDB resale prices remain affordable for all but the those in the lowest decile of household income, it is could be hard to reconcile the facts with the feeling. Amid the rising cost of living and the media constantly stoking up the idea of million dollar HDB resale prices being the norm, those looking to buy a HDB resale flat soon as well as policy makers need to do their homework.

97% of HDB resale transactions are less then $1 million dollars.
The public housing policy was intended to ensure that every household can purchase a roof over their own heads; it was never meant for capital gains nor to pass on wealth to the next generation.
While HDB resale prices have been rising, household incomes have risen even faster for some groups, but not all.
HDB resale is but one of several housing option for new buyers and upgraders.

The key to understanding HDB affordability lies in the data, not in perceptions or headlines. Most million-dollar HDB transactions are outliers, and for the average Singaporean, housing remains affordable. Before letting the sensationalism sway your view, check out the facts for yourself. The Housing Development Board provides comprehensive resale data that is publicly accessible. You can explore trends over the last two decades and see for yourself how prices have evolved in context. FYT has taken the liberty to convert it to an interactve format here, see it for yourself.