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Why Homeowners Should Avoid Overspending on Their HDB Flats

Focus on getting the best value for the budget you have.

This article was written in collaboration with the Ministry of National Development. All views expressed in this article are the independent opinion of based on our research. is not liable for any financial losses that may arise from any transactions and readers are encouraged to do their own due diligence. You can view our full editorial policy here.

In recent times, flash headlines have focused on HDB flats being sold for $1 million or more.

According to transaction data reported by PropNex, approximately 470 HDB resale flats were sold for at least $1 million in 2023. While this might give some potential HDB buyers, particularly first-time homeowners, the impression that HDB resale flats are getting too expensive and that they would need to pay a lot more to buy an HDB flat in 2024, the reality may not necessarily align with this perception.

HDB Flats Sold For $1 Million Or More: The Exception, Not the Norm

It’s easy to focus on news reports and get the impression that $1 million HDB flats are becoming common, as these transactions often grab headlines. However, it’s crucial to point out that, statistically, such sales are the exception rather than the norm.

In 2023, there were a total of 26,735 HDB resale flat applications registered. This means that HDB flats sold for $1 million or more accounted for just 1.8% of all transactions last year. These $1 million or more HDB flats usually have unique attributes, such as being larger units (e.g., Executive and Maisonette flats) or having locations within the city centre (e.g., Pinnacle@Duxton).

When we look at the Resale Price Index (RPI), we can see there has been significant price stabilisation in 2023.

Source: HDB

In 2023, the Resale Price Index (RPI) increased by between 1.0% and 1.5% each quarter. This is significantly lower than the increases observed in 2022 (2.3% to 2.8%) and 2021 (2.9% to 3.4%). Overall, the HDB resale market is showing signs of stabilising, as HDB resale prices rose by 4.9% in 2023—less than half of the 10.4% increase in 2022 and the 12.7% increase in 2021.

Why Have HDB Prices Stabilised?

Several key factors have contributed to the stabilisation of property prices in 2023.

Firstly, an increase in the supply of new housing units has helped. According to HDB, as of February 2024, more than 67,000 flats have been launched since 2021, with HDB on track to launch a total of 100,000 flats from 2021 to 2025. There are plans to launch about 19,600 Build-To-Order (BTO) flats in 2024. Additionally, projects that were delayed due to the pandemic are expected to be completed by 2025.

Moreover, global economic uncertainty and the spike in interest rates over the past two years have also dampened property prices. When interest rates increase, the cost of housing loans rises, making mortgages more expensive. However, buyers taking a housing loan from HDB are not affected by rising market interest rates, as the interest rate for an HDB loan is pegged at 0.10% above the prevailing CPF Ordinary Account (OA) interest rate.

Finally, property cooling measures introduced in 2022 and 2023 have helped slow down the market. These measures include a wait-out period of 15 months imposed on private residential property owners (PPOs) and ex-PPOs wishing to buy a non-subsidised HDB resale flat. However, this wait-out period does not apply to senior Singapore Citizens (and their spouses) aged 55 and above who are moving from their private property to a 4-room or smaller resale flat. Additionally, the Loan-to-Value (LTV) limit for HDB housing loans was lowered from 85% to 80%.

How To Be A Prudent First-Time Singapore Homeowner

With property prices stabilising, some of us might be considering purchasing our first HDB flat in 2024.

Instead of worrying about the current prices of HDB flats, it’s more financially prudent to first determine an ideal budget that we are comfortable with for our first HDB flat. For this, we can use the HDB Budget Calculator.

Consider the example of a young married couple with total savings of $40,000 in their CPF and $20,000 in cash. They are looking for a starter home, and with no children currently, a 3-room flat provides an ideal size.

The Budget Calculator allows us to add housing grants for which we are eligible. For our example, we assumed that the young married couple earns a combined monthly income of $5,000.

As first-time Singaporean homeowners, the couple is eligible for a CPF Housing Grant of $80,000. Additionally, based on their monthly household income, they qualify for the Enhanced CPF Housing Grant (EHG) of $45,000. If they choose a resale flat within 4km of where their parents live, they also receive an additional $20,000 through the Proximity Housing Grant (PHG).

Based on the inputs provided, the HDB Budget Calculator estimates that the budget for the 3-room flat would be $521,300.

The estimated budget of $521,300 is based on the assumption that the young couple takes a maximum loan amount of $316,300, over a repayment period of 25 years. It also assumes that the couple uses their CPF and/or cash savings for the flat’s down payment.

Just because the young couple can afford a flat costing up to $521,300 does not mean they should stretch their budget to the limit. In addition to addressing their housing requirements, the couple might also want to focus on other life goals such as starting a family, pursuing further education, or taking a career break in the future. Thus, they may prefer to spend less than their maximum budget on their flat so that they can allocate their financial resources elsewhere.

The Budget Calculator also allows adjustments to the loan amount and repayment period based on personal preferences. For example, the loan amount could be adjusted to $195,000 with a repayment period of 20 years.

An older couple with higher savings who are looking for a bigger flat (e.g. 5-room flat) can also use the HDB Budget Calculator to estimate their budget.

This couple has a monthly household income of $8,000, combined CPF savings of $100,000, and cash savings of $50,000. As first-timers, they are eligible for a CPF Housing Grant of $50,000, an Enhanced CPF Housing Grant (EHG) of $15,000, and a Proximity Housing Grant (PHG) of $20,000 (if they are buying a flat within 4km of where their parent/child lives).

The older couple would be able to afford an HDB flat of up to $741,000. However, just because they can afford a flat up to this amount doesn’t mean they should stretch their budget to the maximum. For instance, if the couple is prioritising early retirement, they might choose to direct more of their funds towards saving and investing for their retirement nest egg, rather than to buy the most expensive home they can afford.

Instead, they should focus on the attributes that are important to them in a home. For example, based on the median resale prices in the first quarter of 2024, if they prefer a 5-room flat in the west, Jurong West offers good value with a median resale price of $580,900, which is about $160,100 less than their maximum budget. Alternatively, if location is more important, they could consider 4-room flats in areas such as Hougang, priced at $563,500, Geylang at $588,000, or Clementi at $600,000.

Source: HDB

As can be seen from the table above, there are numerous HDB housing options ranging from 2-room to Executive flats across the 26 HDB towns and estates that cater to various budgets. While the largest units – Executive flats – would naturally cost more (median price $716,900 – $907,500), smaller units like 3-room flats (median price $345,000 – $500,000) are much cheaper.

For first-time homeowners who do not yet possess any existing housing equity, it is advisable to purchase a flat that is comfortably within their financial means to avoid overstretching their finances to pay the mortgage.

If you are planning to purchase an HDB flat this year, remember to apply for and obtain a valid HFE letter. The processing time is up to 21 working days following the submission of your HFE application. Therefore, ensure that you apply for your HFE at least one month before your flat application for a BTO flat or before you obtain an Option To Purchase (OTP) from the flat seller if you are buying a resale flat.

Read Also: Guide To HDB Flat Eligibility (HFE) Letter