What’s fuelling demand for million-dollar flats? analyst explains

Price gaps and limited supply boost demand for the flats.

Property analyst, OrangeTee, found that sales of million-dollar HDB flats are projected to hit a new high this year, with 231 resale flats selling more than a million dollars in the first eight months of the year.

In its latest report, OrangeTee explained that demand for such flats were caused by a rising price gap with new suburban private condos. 

It said the first eight months of the year, the price gap between four-room million-dollar flats and new condos in the suburbs is 53.6%. With this, some home buyers may find million-dollar flats more affordable because its median price of four-room million dollar flats is $1.13m whilst the median price of new condos is $1.72m.

Another reason behind the high demand for million dollar flats is the limited supply of large flats in mature estates. 

“Even as more build-to-order (BTO) flats have been launched in mature estates under the Prime Location Public Housing model recently, all the units are 3-room and 4-room flats, possibly to keep prices affordable,” said OrangeTee in the market watcher series.

The growth of wealth backs the housing affordability of residents. Based on government figures, the percentage of resident households earning $15,000 monthly income from work went up steadily over the years, hitting 21.1% last year.

“HDB dwellers, especially those staying in 4-room flats saw the fastest income growth, surging by 33.7 per cent from $6,496 in 2011 to $8,685 in 2021,” read the statement.

The income of those living in five-room and executive flats also rose by 27.5%.

“It is no wonder why many HDB dwellers have the financial means to upgrade to private housing in recent years. The trend is set to continue as Singapore’s economy strengthens further and employment expands in the years ahead,” said OrangeTee.