SINGAPORE: The serene residential enclave of Bukit Panjang has witnessed its first-ever million-dollar Housing and Development Board (HDB) flat sale, sending shockwaves through the local real estate market.

The record-breaking transaction occurred in September when a spacious 127 square meter (1,367 square feet) executive apartment, situated on levels 28 to 38 of Block 181 Jelebu Road, changed hands for a staggering $1.02 million, equating to a price per square foot (psf) of $746.

As per Singapore Realtors Inc (SRI), this highly coveted flat boasts a prime location nestled between the 28th and 30th floors of Block 181, a well-established development along Jelebu Road, completed in 2003.

Block 181 is renowned for its diverse mix of four-room, five-room, and executive flats.

The flat’s lease commenced in 2003, making the development approximately 20 years old.

SRI highlighted that Bukit Panjang has faced a scarcity of Build-to-Order (BTO) projects in recent years, with the last BTO launch dating back to 2016.

Consequently, resale properties within this sought-after enclave of Bukit Panjang have become a preferred choice among homebuyers seeking a place to call their own.

The strategic positioning of this development further enhances its appeal, offering close proximity to key amenities such as the Bukit Panjang MRT station on the downtown line (approximately 148 meters away), the bustling Hillion Mall, and the Bukit Panjang Integrated Transport Hub, just a short 5-minute walk away.

This enviable accessibility to public transportation and shopping centers positions this resale flat as an attractive and practical option for those seeking a convenient and comfortable living experience in Bukit Panjang.

A range of schools is conveniently located within a 1 to 2-kilometer radius of the HDB resale flat, including West View Primary School, Zhenghua Primary School, Greenridge Primary School, Bukit Panjang Primary School, Chua Chu Kang Secondary School, and West Spring Secondary School.

322 Million-Dollar deals to date

According to SRI, to date, a total of 322 million-dollar HDB resale deals have transpired within the first nine months of 2023, in contrast to the 369 million-dollar deals recorded in 2022.

Over the past few years, numerous residential estates across the island have borne witness to the phenomenon of million-dollar transactions, with notable exceptions being Choa Chu Kang, Jurong West, Sembawang, and Sengkang.

Singapore in August this year witnessed a significant surge in the resale market for HDB flats, a total of 54 HDB resale flats were transacted for at least $1,000,000, marking a notable increase compared to July 2023, which saw 32 such transactions, and June of the same year, with 34 million-dollar flat sales.

This is also the highest volume of resale flats transacted for at least $1 million to date, according to data from the Singapore Real Estate Exchange (SRX) issued on September.

A recent UBS report has reclassified Singapore’s private residential property market as “fairly valued” after a period of slowed price dynamics.

Real estate prices surged by 15% since 2018, despite regulatory tightening, while rents spiked by approximately 40% over the same period.

However, cooling measures and stricter lending policies have led to a modest 3% increase in home prices in inflation-adjusted terms between mid-2022 and mid-2023.

UBS anticipates both home price growth moderation and rent softening as housing supply increases and demand stabilises.

Regulatory risks are a key concern, as rental market regulations remain a possibility.

Affordability, as measured by the price-to-income ratio, is stretched in numerous cities despite recent house price declines.

Unaffordable housing is often attributed to factors such as strong foreign investment, zoning restrictions, or strict rental market regulations.

Weak investment demand poses risks of price corrections and long-term price appreciation challenges.

In Singapore, it takes an average service worker ten years of income to afford a 650 sq ft flat near the city centre, making it more affordable than in Hong Kong, where it would take 22 times the average annual income.

Among other cities, Miami, Madrid, and Toronto exhibit more sustainable price-to-income ratios.

Singapore ranks sixth for affordability among 25 cities surveyed by UBS.

Price-to-rent multiples have declined compared to the previous year, with a Singapore apartment taking around 23 years of rent to pay for itself, in contrast to 15 years in Miami and 42 years in Tel Aviv.

UBS found that real housing prices across 25 major cities had dropped by 5% in inflation-adjusted terms on average.

Rising financing costs due to tripled average mortgage rates since 2021 have hindered housing price growth.

The report highlights that annual nominal price growth stagnated after a 10% rise in the cities analysed, with many cities now approaching mid-2020 price levels.

Only Zurich and Tokyo remain in the bubble risk category this year, with several cities previously in this category, including Toronto, Frankfurt, Munich, Hong Kong, Vancouver, Amsterdam, and Tel Aviv, now classified as overvalued.

This group also includes housing markets such as Miami, Geneva, Los Angeles, London, Stockholm, Paris, and Sydney.

Apart from Singapore, other property markets deemed “fairly valued” by UBS include New York, Boston, San Francisco, Madrid, Milan, Sao Paulo, Warsaw, and Dubai.