
If you’re looking for a sure-fire conversation starter in Singapore, HDB flat prices are always a hot topic among relatives and friends.
Whether it’s your uncle in his 60s reminiscing about the days when HDB flats cost less than $100,000, your single friends lamenting today’s high prices, or your married cousins considering selling their newly MOP-ed BTO for over $1 million, everyone has an opinion.
Whether rising HDB prices are a good or bad thing quite often depends on who you ask. But what exactly are the pros and cons that matter if we were to analyse this topic objectively?
How Much Have HDB Flat Prices Risen Over the Past Decades?
Let’s start with the numbers. Since the first quarter of 2009, when the HDB Resale Price Index (RPI) was set at 100 as the base period, the index has nearly doubled to 197.9 as of the fourth quarter of 2023.

Source: HDB
While this may seem like a steep increase over 16 years, it mirrors the trend of the previous 16-year period. From 1994 to 2009, the HDB Resale Price Index also nearly doubled, rising from 50.4 to 100.
In other words, over two consecutive 16-year periods, HDB resale prices have doubled—a pattern highlighting the long-term trend where public housing prices have appreciated over time, at an average of about 4.5% per year.
It’s important to stress that this doesn’t suggest that the HDB price appreciation trend will continue indefinitely. Instead, our point here is that higher HDB prices aren’t a recent phenomenon but have been around for decades.
Also, it’s worth pointing out that from the period of 2Q2013 (149.4) until around 2Q2019 (130.8), the HDB Resale Price Index was declining, and it only breached 149.4 again in 2Q2021.
Wealth Creation Through Real Estate Is Generally A Good Thing
Generally speaking, no one should be hoping for property prices to decline—unless they have a vested interest in doing so. This could include those who have just sold their property and are waiting on the sidelines, betting on lower prices, or first-time buyers postponing their purchase in hopes of scoring a better (and cheaper) deal.
A drop in property prices ultimately leads to wealth destruction. As we saw during the U.S. subprime mortgage crisis from 2007 to 2010, such wealth destruction can trigger many other problems, affecting not just homeowners but the broader economic system.
We should also consider that most homeowners, both in Singapore and globally, finance their property purchases through a mortgage. For example, if a homebuyer purchases a $400,000 property with a $100,000 down payment and takes a $300,000 loan over 20 years at an interest rate of 2.6% per annum, their total repayment would amount to approximately $484,960. This means the actual cost of the home far exceeds its initial purchase price.
If property prices fall below $400,000, homeownership becomes a value-declining purchase—where the property is worth less than what was paid, including interest costs. On the other hand, if property prices rise, homeownership leads to wealth creation. This can be particularly beneficial for retirees, who can monetize their homes in various ways to fund their retirement. Options include government schemes like the Lease Buyback Scheme or rightsizing to a smaller, more affordable home.
With wealth creation, homeowners can cash out, downsize, or leverage their property for financial security. However, with wealth destruction, those options diminish, and the only real goal becomes paying off the mortgage before retirement.
More Expensive HDB Flats Make It Harder For First-Time Homeowners
The problem with rising HDB flat prices is that it is harder for first-time homeowners to purchase their first home. This is a challenge not just in Singapore but globally as well, including in the U.S. and Hong Kong. In these countries, the claim is that the current income of young working adults and middle-income families just has not risen as much as property prices.
Household Income To HDB Flat Prices
When we look at the average household income in Singapore, the median household income at the 50th percentile is $9,646 per month (excluding employer CPF contribution) as of 2023. In 2009, the amount at the 50th percentile was $5,398. This means household income has increased by about 79% during these 15 years (2009 to 2023), while HDB prices have increased about 80% during the same 15-year period (2009 to 2023).
At the 20th percentile, monthly household income from work has increased from $2,491 in 2009 to $4,166 as of 2023, an increase of about 67%.
2009 | 2023 | Increase (%) | |
HDB Resale Price Index | 100.0 | 180.4 | 80% |
Household Income 20th Percentile | $2,491 | $4,166 | 67% |
Household Income 50th Percentile | $5,398 | $9,646 | 79% |
The analysis shows that while HDB prices have risen substantially over the past 15 years, average household incomes have also increased. Moreover, this doesn’t account for housing grants, which have been enhanced over the years to support homebuyers.
This trend shouldn’t come as a surprise. Housing is a fundamental need, and as household incomes in Singapore rise, it is natural for HDB flat prices to follow suit. Whether it’s young working adults purchasing their first matrimonial home or families upgrading to a larger flat, higher income levels generally drive demand and, in turn, higher home prices.
Who Actually Loses Out?
As incomes across all age groups rise, home prices naturally follow suit. This isn’t a concern for those who bought their first home years ago when both incomes and property prices were lower, as they are now likely sitting on capital gains. Likewise, young working adults who have just entered the workforce shouldn’t be overly worried—while property prices today are much higher than 15 years ago, their starting salaries have also risen to keep pace.
We think that the group that loses out in this scenario is those whose income levels have stagnated—potentially individuals in their 40s—while remaining out of the property market. Not only do they face the challenge of potentially earning less than the younger generation entering the workforce after them (as each generation is, on average, likely to earn more than the generation before them), but they also have to contend with rising property prices, which naturally follow overall income growth in the nation.
For this group, higher property prices will not be a good thing because unless their income rises quickly, which could be difficult given that they are already in their 40s, buying their ideal home may become harder over time.
Read Also: Why The $16,000 EC Income Ceiling For EC May No Longer Makes Financial Sense
Top Image Credit: Soh Qi Hang, DollarsAndSense
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