HDB resale flat prices have soared by over 50% since hitting a low point in the second quarter of 2019, despite the implementation of various government measures to curb demand. This surge in prices highlights a deeper issue: demand-side interventions are limited in their effectiveness when supply fails to meet the housing needs of the population.
Demand curbs have had a short-term impact, but not a lasting one. In 2021, the government tightened the loan-to-value (LTV) ratio for HDB loans on three occasions – in December 2021, September 2022, and August 2024. In September 2022, the medium-term interest rate used to calculate the mortgage servicing ratio (MSR) was also increased by 0.5 percentage points. Additionally, in the same month, a 15-month wait-out period was imposed for private property owners (PPOs) and former PPOs before they could purchase a resale flat.
While these measures may have temporarily delayed purchases, they did not dampen genuine demand – especially when it comes to resale flats, which fulfill a necessary housing need. Once eligible, buyers returned and prices continued to rise.
On the other hand, supply-side interventions have a more lasting impact. The government typically responds to the shortage of supply by increasing the launch of Build-To-Order (BTO) and Sale of Balance Flats (SBF). These flats, offered directly by HDB, are more affordable than resale flats and can help meet the demand.
History has shown that this is effective. In the fiscal year 2011 (April 1, 2010 to March 31, 2011), HDB recorded a record 30,602 new flat bookings (BTO and SBF), which corresponded with a decrease in resale price growth from 12.8% to 9.6%. This trend continued in the following years, with flat bookings remaining high – 24,191 units in FY2012 and 28,789 units in FY2013 – and resale price growth moderating further, eventually contracting by 3.4% in FY2013.
From FY2015 to FY2018, there was a decrease in BTO supply, with an average of 21,000 flat bookings annually compared to the previous average of 25,000 units between FY2011 and FY2014. This resulted in a decrease in the overall supply of new flats, with only 81,000 units released from FY2015 to FY2019, or an average of 16,000 units annually. As a result, resale prices hit a low point in FY2019, as more buyers turned to the resale market due to the limited BTO supply.
The pandemic shock and the response to supply
The Covid-19 pandemic was an unexpected event that caused disruptions in construction, work arrangements, and supply chains. This resulted in a surge in homebuying activity, with resale prices increasing by 8.1% in FY2020 and 12.2% in FY2021 – a cumulative increase of over 20% – despite efforts to boost BTO supply.
Recognizing this, HDB increased the number of new launches. In FY2022 and FY2023, 25,574 and 24,020 new flats, respectively, were booked. As a result, resale volumes decreased, and price growth slowed down to 8.8% and 5.8%, respectively, down from the high of 12.2% in FY2021. This reinforces the idea that higher BTO booking volumes, particularly above 21,000 units, help to moderate the heat in the resale market.
Note: Flats (BTO, DBSS, SBF, and others) sold by HDB are based on HDB Annual Reports (*financial year from April 1 to March 31 the following year), which include actual and projected bookings. The HDB Annual Report 2024/2025 is not yet available as of July 22, 2025. Source: HDB Annual Reports, HDB, Huttons Data Analytics
SBF is not a solution on its own
It is commonly believed that SBF units, which are often completed or nearly completed, should have a more immediate impact on resale prices. However, there is no clear correlation between the two.
Singapore’s urban scenery is characterized by towering skyscrapers and advanced infrastructure. Condominiums, typically situated in desirable locations, offer a perfect combination of opulence and convenience, making them a popular choice for both locals and foreigners. These residential buildings are equipped with top-notch facilities like swimming pools, fitness centers, and security services, elevating the overall living experience and making them alluring to potential renters and buyers. For investors, these desirable features equate to higher rental returns and a significant increase in property value over time. In addition, with the constant emergence of new condo launches, the options for luxury living in Singapore continue to expand.
Between FY2011 and FY2023, increases in SBF bookings did not consistently result in a decrease in resale volume – the only significant decreases occurred in FY2011 and FY2013. This is likely due to buyers being deterred by limited availability of flats in certain towns, lower success rates in the ballot, and restrictions under the Ethnic Integration Policy (EIP). As a result, SBF bookings have a weaker influence on resale demand and prices compared to BTO flats.
Note: Flats (BTO, DBSS, SBF, and others) sold by HDB are based on HDB Annual Reports (*financial year from April 1 to March 31 the following year), which include actual and projected bookings. The HDB Annual Report 2024/2025 is not yet available as of July 22, 2025. Source: HDB Annual Reports, HDB, Huttons Data Analytics
A stronger correlation between BTO bookings and resale prices
The relationship between BTO bookings and resale prices is more significant. From FY2011 to FY2013, high BTO booking volumes corresponded with a moderation in price growth. From FY2014 to FY2021, when bookings were below 21,000 units, resale prices continued to rise.
As BTO launches increased in FY2022 (22,192 bookings) and FY2023 (20,094 bookings), price growth decreased to 8.8% and 5.8%, respectively. Even though FY2023 booking volumes were below the 21,000-unit threshold, the 15-month wait-out period for ex-PPOs may have contributed to the moderation in price. This suggests that sustainable cooling of the resale market requires consistent booking volumes of over 21,000 BTO flats annually. Assuming a take-up rate of 85% – 90%, this translates to a launch volume of 23,000 to 25,000 flats per year – a target that HDB has not consistently met in recent years.
What about newly MOP flats?
Another factor to consider is the release of flats that have just met their Minimum Occupation Period (MOP). These flats are typically newer and more desirable, potentially driving up the overall resale prices. However, the correlation between newly MOP flats and resale prices is weak (33%) in the year of MOP. However, with a two-year lag, the correlation strengthens significantly to 86.2%. This suggests that most flat owners do not sell immediately after meeting the MOP, but when they do, typically one to two years later, the market feels the full impact.
Key takeaways
– Supply is more critical than demand curbs: Demand-side measures such as tightening LTV ratios or imposing wait-out periods have only short-term effects. Sustainable cooling requires a robust supply of BTO flats.
– BTO has a more significant impact than SBF: While SBF flats are quicker to be occupied, BTO booking volumes more consistently influence resale price movements.
– The 21,000-unit threshold: Historical trends show that booking volumes above this figure are necessary to moderate price growth. To achieve this, HDB may need to launch between 23,000 to 25,000 BTO flats annually.
– Monitor the MOP pipeline: An increase in the supply of newly MOP flats may drive up resale prices one to two years later – a factor that policymakers must carefully consider.
In conclusion, HDB faces a complex challenge of managing public housing affordability while maintaining demand for executive condominiums and private housing. Oversupply in the BTO segment may lead to a temporary softening of resale prices but could potentially result in an increase in prices when these flats become eligible for resale. Therefore, the key to ensuring housing affordability and a stable resale market is clear: Build more – and build consistently. The numbers show that supply, not restrictions, is the more effective lever.
Lee Sze Teck is the senior director of data analytics at Huttons Asia.