Buyers may be ‘overpaying’ for million-dollar flats: analyst

For Q4, HDB resale volumes may drop but prices are slated to rise.

Homebuyers are being called to exercise caution, with a real estate analyst saying that select buyers may have overpaid for their million-dollar homes.

Christine Sun, chief researcher & strategist, OrangeTee Group, warned that many buyers may be overpaying for flats that should not warrant such prices.

“The prevailing trends indicate that many buyers are paying a premium for flats situated on lower floors, smaller units or flats located farther from the city centre,” Sun said.

“Should prices persist at elevated levels, it is imperative for prospective home buyers to exercise prudence and avoid overpaying,” she added.

This comes on the back of an uptick in million-dollar flats located at non-mature estates. The volume of such flats climbed to 9.1% of all units in the first nine months of 2024, versus just 4.3% of all flats sold in the same period in 2022.

The proportion of lower-floor million-dollar flats— those located at 12 storeys or lower— have also risen to 42.2% of all flats sold versus just 34.7% in 2022.

Four-room million-dollar flats have surged to 33.9% of all four room flats sold from January to September 2024, 253 units. Two years back, it only made up 9% of the flats sold, or 25 units.

In 2024, the number of million-dollar flats is likely to exceed 1,000 and reach 3% to 4% of total market volume, according to Lee Sze Teck, senior director, data analytics, Huttons Asia.

The number of million-dollar flats hit a high of 328 in Q3 alone, Lee noted. The proportion of million-dollar flats are high in Bishan, Bukit Merah, Bukit Timah, Central Area, Kallang/Whampoa, Queenstown and Toa Payoh.

Prices to rise further in Q4
For Q4, HDB resale volumes might drop slightly, although more units may be sold at higher prices, Sun said.

Sun said that resale flats near the future Prime Location Housing (PLH) and Plus flat sites could also fetch higher prices. 

“Some buyers may prefer resale units that come with shorter Minimum Occupation Period (MOP) and less stringent selling criteria when compared to new Plus or Prime flats,” Sun said.

Meanwhile, Lee expects demand for HDB resale flats to stay strong in 2024 despite the cooling measures.

“The cut in interest rates will translate into lower borrowing costs and a higher loan quantum for buyers. This may afford buyers the ability to look at HDB resale flats in better locations. Prices may increase as a result in the coming months,” Lee said.