What Went Wrong in Singapore’s Resale Flat Market?

Ryan Ong



That’s a question we’ve been asking a lot lately. Between falling cash premiums, about-turns in housing policies and cheaper condos, maybe resale flats aren’t as great an asset as we thought. On the other hand, didn’t we read something about million dollar flats a while back? In this article, we’ll look at what went wrong, in a resale market more confused than Justin Bieber’s gender:


What is Wrong With the Resale Market?

Let me just tell you what isn’t wrong in the resale market. It’s quicker. Here you go:

Yeah that’s right. Nothing.

Because over the last quarter, the resale market’s been slapped around like a stepchild in a fairy tale. And the price charts look like my pulse rate while watching The Ring: A sharp spike, followed by a distressingly flat line. Appropriate, since watching the resale market’s exactly like watching a horror movie unfold.

According to the Singapore Real Estate Exchange (SRX), median cash-over-valuation (COV) for resale flats was $35,000 in January. As of last May, this was around $26,000. That’s the lowest median COV since April 2012, in a market that (I admit) even I thought wouldn’t cool.

Executive apartments and three-room flats were both hit hard. Executive apartments fell from a median COV of $55,000 in January, to around $45,000 in May. Three-room flats fell from around $29,500 to $20,000.

Transaction volumes have fallen lower than worm droppings. SRX says about 2,700 flats changed hands between April and May this year. In the same period last year, the number was about 4,000.

To summarize: Fewer people are buying resale flats, and the COV is plummeting.


Why is This Happening?


Flats under construction
Yeah, that looks done enough. Start on the next block, we have an oversupply to meet.


Some speculative reasons follow. These are:

  • Flat prices may have hit the ceiling
  • Cooling measures gaining traction
  • Steep developer discounts
  • BTO launches soaking up some demand
  • Market speculation on HDB’s new “price setter” policy


Flat Prices May Have Hit the Ceiling

HDB flats have appreciated by around 80% since 2007 / 2008. Compared to any other kind of asset, that figure’s surreal. But no asset rises in price forever. And at present, investors may sense a real or psychological limit being reached.

Minister Khaw Boon Wan’s talk of HDB being a “price setter” now (see below) are doing nothing to allay their suspicions.

Fewer buyers are confident of flat prices continuing to rise for another three to five years. As such, fewer buyers are biting, and sellers are softening the COV in response.


Cooling Measures Gaining Traction

The new home loan restrictions have made it harder to get financing for property in general. The resale market isn’t spared, and sellers are trying to compensate by lowering their COV.

If you need to know how to go about getting a home loan in this market, contact a mortgage specialist at MoneySmart.


Man crawling under barbed wire
I swear, it gets harder for foreigners to qualify for home loans every year.


Steep Developer Discounts

As I said, there are fewer buyers because home loans are harder to get. And…wait, do you smell that?

Like a whiff of rancid cheeseburger and body odour. We must be near a showflat, because that’s the reek of fear. Property developers in Singapore are worried about cooling measures, even as their Malaysian counterparts struggle to see past the champagne and party hats.

Their worry may not be obvious (condo sales are brisk), but look closer. Their transaction numbers owe a lot to discounts and incentives. Because unlike resale flat sellers, developers are less stubborn about maintaining their asking price.

(And of course they’re less stubborn. For them it’s a business decision; they’re not selling a treasured family home).

Those discounts are causing some buyers to get condo units instead of resale flats.


BTO Launches Soaking Up Some Demand

I include this because a lot of the investors I spoke to raised the point. There’s a feeling that, due to the large supply of BTO flats being released, the demand for resale flats has fallen. *shrug* Maybe, I suppose.

But as a matter of opinion, I don’t think BTO flats siphon a lot of demand from the resale market. Some demographics (e.g. single parents, Permanent Residents) don’t qualify for BTO flats anyway. Also, the potential two to three year wait time still makes BTOs a non-option for many newlyweds.


Khaw boon wan fist pumping
“And make sure the body of that property speculator he’s standing on is left out of the shot.”



Market Speculation on HDB’s New “Price Setter” Policy

As Mr. Propwise has pointed out, HDB’s approach is changing. His article explains it in detail, but I’ll summarize it:

It used to be that new flat prices were pegged to resale flat prices. As such, the rising prices of resale flats (due to appreciation) would raise the prices of new flats, and the prices of those new flats would push up the prices of resale flats, etc.

This cycle explains the 80% appreciation over five to six years.

But Minister Khaw has announced a change in policy, in which new flat prices are pegged to affordability benchmarks instead. That means an end to the upward price spiral, which has caused some investors to back out of the resale market.

We’ll miss those speculators. About as much as tapeworm victims miss their parasites.


Is There Hope?

According to property investor Charlie Sng:

My guess is that COV prices will fall to the $20,000 to $25,000 range, which I believe is the same as the general consensus. And it will stay there for the next two years or so.

It’s probable that people with more than one house will soon sell off their flats, as prices seem likely to just fall further. Some will want to quickly sell now, at what they perceive as the height of resale flat prices. The moment they all start doing so, COV is likely to fall even more.

But the standoff between buyers and sellers is not over yet, even if it seems buyers have time on their side.”

Do you think it’s high time resale flat prices fell? Comment and let us know!


Image Credits:
dinuks, ashykyd, DVIDSHUB,


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Ryan Ong

I was a freelance writer for over a decade, and covered topics from music to super-contagious foot diseases. I took this job because I believe financial news should be accessible and fun to read. Also, because the assignments don't involve shouting teenagers and debilitating plagues.