After long drought, HDB upgraders are finally back in the home market

Which flats are they buying?

More private residential units were snapped up by buyers with HDB addresses in the third quarter, according to data released by DTZ.

The number of buyers with HDB addresses rose by nearly 20.5% year-on-year in the third quarter, with almost half of purchased units smaller than 69 square metres.

“The floor area of the private homes purchased was similar to that of 3 room HDB flats, which ranged from 50 sqm to 70 sqm. These units are usually priced below $1m and are suitable for rental,” said DTZ.

Meanwhile, roughly 15% of the buyers with HDB addresses purchased units that are bigger than 120 sqm, which are larger than 5 room HDB flats built after 2000.

“Notwithstanding, we expect to see more HDB upgraders in subsequent quarters. Historically, the number of buyers with HDB addresses tends to rise when the private market softened,” DTZ said. 

“While prices for HDB flats also trended downwards, most HDB homeowners who bought in 2010 and satisfy the 5 year minimum occupation period (MOP) still enjoy significant capital gains if they were to sell their HDB homes. With the HDB resale market expected to soften further with more Built-To-Order launches and improving sales in the private market, the incentive to upgrade is greater with their capital gains made in the HDB resale market,” the report noted.