Is 2024 the right time to buy your first HDB flat?

If you're pondering the idea of purchasing your first HDB flat, you've likely heard that the property market operates in cycles, making the timing of your move a critical factor.

As we step into 2024, it appears that this year could present a golden opportunity for first-time buyers eyeing a Housing and Development Board (HDB) flat. This article aims to guide you through the decision-making process, especially if you find yourself on the fence as the upcoming BTO launch in February looms closer.

As a first-time buyer, which property types should you go for?

In Singapore, around 78 per cent of resident households call HDB flats their home.

Among those taking their initial steps into homeownership, BTO flats stand out as the most favoured choice, with 31 per cent opting for this route, followed closely by 25 per cent choosing HDB resale flats.

Challenges during the pandemic

The tumultuous period brought about by the Covid-19 pandemic presented unique challenges for first-time homebuyers.

Delays in under-construction BTO projects affected many young couples, pushing some to explore the secondary market. The surge in demand for resale flats during this period led to a notable uptick in HDB resale prices. These challenges prompted a reevaluation of housing plans for numerous individuals, some of whom resorted to renting properties temporarily.

Improvements post-Covid

Fortunately, post-Covid developments have brought about positive changes, particularly for those eyeing a new HDB flat.

The Government responded by increasing the supply of BTO flats, effectively reducing the average wait times from four-six years to a more manageable three-four years. This surge in supply has successfully cleared the backlog of BTO applicants, enhancing the prospects for first-time buyers.

Non-selection penalty and improved odds for first-timers

New policies have been implemented to further streamline the allocation process.

The introduction of the non-selection penalty is one such measure aimed at discouraging less committed buyers. For first-time BTO applicants, not selecting a unit when given the opportunity now comes with consequences. They are subsequently considered second-time buyers for the next 12 months, drastically limiting their choices in subsequent applications. This, in turn, increases the chances of efficient allocation for those who urgently need a flat.

What's more, there are special plans like the First-Timer (Parents and Married Couples) priority category. These are designed to help families with kids, giving them extra support as they start their journey to owning a home.

Expected pace of HDB sales launches and government targets

Looking ahead, it's essential to be aware of the Government's goals in the housing sector.

The aim is to supply 100,000 flats from 2021 to 2025. However, the pace of sales launches might ease off slightly in 2024, with 19,600 homes planned, a figure lower than the past three-year average. This could have implications for the availability and competition for new flats in the market.

Resale prices stabilisation

The landscape of resale flat prices has experienced moderation in growth.

Cooling measures implemented in September 2022, combined with factors like declining sales and buyer resistance to further price hikes, led to a decrease in resale price growth. From a high of 12.7 per cent in 2021, it dropped to 4.8 per cent in 2023.

Predictions for 2024 suggest a modest increment of three to five per cent, offering potential buyers a more stabilised pricing environment.

Decreasing supply of resale flats

While resale prices are expected to stabilise, it's essential to consider the supply side of the equation.

The number of resale flats reaching their five-year Minimum Occupation Period (MOP) is on the decline. From 30,920 units in 2022, it dropped to 15,549 units in 2023. Projections indicate a further decrease in 2024, with 11,952 units. In fact, the number of completed private homes receiving Temporary Occupation Permit (TOP) is also estimated to decrease from around 21,125 units in 2023 (excluding executive condominiums or EC) to approximately 7,526 units in 2024.

This means timing is crucial — you don't want to miss an opportunity to buy your first home (HDB or otherwise) when it arises.

ALSO READ: 6 key trends of the Singapore property market in 2024: Here's what buyers can expect

This article was first published in 99.co.