A $2 Million HDB Flat? Here’s When We May Possibly See The First One

I remember the first time we hit a million dollars for an HDB flat (this was an Executive HDB at Mei Ling Street in 2012). The idea of spending a seven-figure sum on an old resale HDB flat seemed ludicrous to many at the time, with some experts even deeming million-dollar HDB flats an unlikely phenomenon.

Fast-forward to the present day, the past three years have rewritten the narrative with an influx of million-dollar HDB flats hitting the market. As of the end of October 2023, we’ve witnessed 369 transactions of this nature, matching last year’s total and positioning us on the cusp of setting a new record. This surge in high-value transactions brings forth an intriguing question: at this current pace, how long will it be before we see HDB flats reaching the $2 million mark?

An important point to note

This is not a statement that resale HDB flats are going to reach $2 million, nor is it a guaranteed timeline of any sort. It’s a hypothetical question that doesn’t take into account certain factors like government intervention (for example, if there's a possibility of an HDB oversupply in the future); we have no doubt that HDB impose restrictions, or take whatever actions become necessary if need be.

(And then, there are potential black swan issues like another pandemic or a major war. Touch wood!)

One of the factors is also going to be lease decay: many of the priciest flats today are also among the oldest (e.g., in towns like Queenstown, Tiong Bahru, and Marine Parade). These may not keep climbing in value, once they reach a certain point in their lease. 

Also, we are aware that predicting property market prices is a complex task involving advanced statistical and modelling techniques that are very time-consuming. However, such methods aren't foolproof either as external shocks are very unpredictable (such as COVID-19). People have attempted this, but there's no method that accurately predicts prices over and over again in a repeated manner. If they could tell the future accurately, well, they'd be billionaires.

So with that out of the way, let's start off by looking at HDB prices over the years!

A look at HDB prices over the years

Year	Min	Avg	Max
2000	$36,000	$258,057	$728,000
2001	$28,000	$243,470	$740,000
2002	$29,000	$234,834	$700,000
2003	$35,000	$231,343	$670,000
2004	$55,000	$235,169	$670,000
2005	$40,000	$234,165	$635,000
2006	$65,000	$236,079	$600,000
2007	$73,000	$262,277	$780,000
2008	$90,000	$317,142	$890,000
2009	$127,000	$337,913	$818,000
2010	$140,000	$379,939	$900,000
2011	$190,000	$425,382	$903,000
2012	$209,000	$461,493	$1,010,000
2013	$208,000	$476,441	$1,050,000
2014	$195,000	$442,716	$1,088,888
2015	$195,000	$434,710	$1,088,000
2016	$190,000	$438,839	$1,150,000
2017	$175,000	$443,889	$1,180,000
2018	$160,000	$441,282	$1,185,000
2019	$150,000	$432,138	$1,205,000
2020	$140,000	$452,279	$1,258,000
2021	$180,000	$511,376	$1,360,000
2022	$200,000	$549,715	$1,418,000
2023	$217,000	$570,144	$1,500,000

At first glance, it looks as if the price disparity between the most expensive flats, versus the average, is increasing. However, let’s look at the actual percentage difference between the maximum and average prices:

Year	Avg	Max	% Difference
2000	$258,057	$728,000	182.1%
2001	$243,470	$740,000	203.9%
2002	$234,834	$700,000	198.1%
2003	$231,343	$670,000	189.6%
2004	$235,169	$670,000	184.9%
2005	$234,165	$635,000	171.2%
2006	$236,079	$600,000	154.2%
2007	$262,277	$780,000	197.4%
2008	$317,142	$890,000	180.6%
2009	$337,913	$818,000	142.1%
2010	$379,939	$900,000	136.9%
2011	$425,382	$903,000	112.3%
2012	$461,493	$1,010,000	118.9%
2013	$476,441	$1,050,000	120.4%
2014	$442,716	$1,088,888	146.0%
2015	$434,710	$1,088,000	150.3%
2016	$438,839	$1,150,000	162.1%
2017	$443,889	$1,180,000	165.8%
2018	$441,282	$1,185,000	168.5%
2019	$432,138	$1,205,000	178.8%
2020	$452,279	$1,258,000	178.1%
2021	$511,376	$1,360,000	165.9%
2022	$549,715	$1,418,000	158.0%
2023	$570,144	$1,500,000	163.1%
Average			163.7%

Notice that the price disparity was actually bigger from 2000 to 2008, when the percentage difference was around 180 per cent. But in recent years, the disparity has shrunk. As of today, the average difference is around 163.7%. 

So despite the ever-rising quantum of million-dollar flats ($1.5 million in Moh Guan is the record-holder as we write this), the price disparity is actually less than it was in the pre-2009 period. 

Next, we’ll use this figure (163.7 per cent) to try and determine when we might see flats reach $2 million, assuming we maintain the current pace:

Assuming a disparity of 163.7 per cent, it means the average flat price must hit $758,399, for us to see the most expensive flats reach $2 million.

If we assume HDB growth rates remain consistent from the year 2000 onward, here’s how long it may take:

Year	Avg
2000	$258,057
2001	$243,470
2002	$234,834
2003	$231,343
2004	$235,169
2005	$234,165
2006	$236,079
2007	$262,277
2008	$317,142
2009	$337,913
2010	$379,939
2011	$425,382
2012	$461,493
2013	$476,441
2014	$442,716
2015	$434,710
2016	$438,839
2017	$443,889
2018	$441,282
2019	$432,138
2020	$452,279
2021	$511,376
2022	$549,715
2023	$570,144
2024	$556,848
2025	$571,550
2026	$586,252
2027	$600,954
2028	$615,656
2029	$630,358
2030	$645,060
2031	$659,762
2032	$674,464
2033	$689,166
2034	$703,868
2035	$718,570
2036	$733,272
2037	$747,974
2038	$762,676

At the current rate we’re going, the average price of an HDB flat might reach the $758,000 mark sometime in 15 years (the year 2038). When that happens, we might also see the first $2 million flats.

What if we base it on resident population growth?

A higher resident population means more demand, and that does weigh on flat prices. So we looked at it from the angle of population growth as well.

Here is the increase in average flat prices, alongside population growth: 

Year	Singapore Residents	Max
2000	3273363	$728,000
2001	3325902	$740,000
2002	3382944	$700,000
2003	3366891	$670,000
2004	3413266	$670,000
2005	3467814	$635,000
2006	3525894	$600,000
2007	3583082	$780,000
2008	3642659	$890,000
2009	3733876	$818,000
2010	3771721	$900,000
2011	3789251	$903,000
2012	3818205	$1,010,000
2013	3844751	$1,050,000
2014	3870739	$1,088,888
2015	3902690	$1,088,000
2016	3933559	$1,150,000
2017	3965796	$1,180,000
2018	3994283	$1,185,000
2019	4026209	$1,205,000
2020	4044210	$1,258,000
2021	3986842	$1,360,000
2022	4073239	$1,418,000
2023	4149253	$1,500,000

Now when we first did this, we tried to compare the population growth percentage to the maximum flat prices. This didn’t work out, as the estimated rate was way off when we compared it to the first 10 years. So instead, we compared it to the average flat prices, and then it started to make more sense:

Year	Singapore Residents	Avg
2000	3273363	$258,057
2001	3325902	$243,470
2002	3382944	$234,834
2003	3366891	$231,343
2004	3413266	$235,169
2005	3467814	$234,165
2006	3525894	$236,079
2007	3583082	$262,277
2008	3642659	$317,142
2009	3733876	$337,913
2010	3771721	$379,939
2011	3789251	$425,382
2012	3818205	$461,493
2013	3844751	$476,441
2014	3870739	$442,716
2015	3902690	$434,710
2016	3933559	$438,839
2017	3965796	$443,889
2018	3994283	$441,282
2019	4026209	$432,138
2020	4044210	$452,279
2021	3986842	$511,376
2022	4073239	$549,715
2023	4149253	$570,144

We can see that, when the population increased by 15.2 per cent between 2000 to 2010, average flat prices went up by 47.2 per cent. As such, a one per cent increase in population might result in an increase of 3.1 per cent in average prices.

Based on this assumption, flat prices in the year 2020 should have seen a 22.4 per cent growth rate, based on the 7.2 per cent increase in population. Checking against the numbers, we can see that we’re fairly close: we’re off by around $13,000 for the average price at the time (we’re off by just around a difference of 2.8 per cent).

If you consider this to be close enough, we can use it to guess when the most expensive flats might reach $2 million. This means we’d need a 10.65 per cent increase in resident population (a resident population of around 4,591,148 people), to hit an average flat price of $758,399. Only then might we see the first $2 million flats start to appear.

But when is this likely to happen?

If we go by the disparity between average and maximum prices, as well as population growth, the likely time seems to be around 2034 to 2035.

What if we go by wage increment?

Most of us would assume wages and home prices are tied, as housing affordability is a perennial issue. So we looked at how HDB prices have risen along with wages, to try and determine when flats might reach $2 million:

Median wage increases over the years:

Year	Median (50th Percentile)	HDB Max Price
2001	$2,387	$728,000
2002	$2,380	$740,000
2003	$2,410	$700,000
2004	$2,326	$670,000
2006	$2,449	$600,000
2007	$2,543	$780,000
2008	$2,897	$890,000
2009	$2,927	$818,000
2010	$3,000	$900,000
2011	$3,249	$903,000
2012	$3,480	$1,010,000
2013	$3,705	$1,050,000
2014	$3,770	$1,088,888
2015	$3,949	$1,088,000
2016	$4,056	$1,150,000
2017	$4,232	$1,180,000
2018	$4,437	$1,185,000
2019	$4,563	$1,205,000
2020	$4,534	$1,258,000
2021	$4,680	$1,360,000
2022	$5,070	$1,418,000
2023	$4,993	$1,396,464
2024	$5,129	$1,434,501
2025	$5,265	$1,472,538
2026	$5,401	$1,510,576
2027	$5,537	$1,548,613
2028	$5,673	$1,586,650
2029	$5,809	$1,624,687
2030	$5,945	$1,662,724
2031	$6,081	$1,700,761
2032	$6,217	$1,738,798
2033	$6,353	$1,776,835
2034	$6,489	$1,814,872
2035	$6,625	$1,852,909
2036	$6,761	$1,890,946
2037	$6,897	$1,928,983
2038	$7,033	$1,967,021
2039	$7,169	$2,005,058

Note: Data for 2000 and 2005 is not available, as the Labour Force Survey was not conducted for those two years.

The first thing we notice is that, despite intuitive assumptions about wages and housing affordability, the two don’t always move in tandem. As you can see from above, the HDB price cycle is not as linear as wage growth. 

Nonetheless, if you look at the decade between 2001 and 2022, wages grew 112.4 per cent, whilst maximum flat prices grew by 94.78 per cent. Looking at the first 10 years, we can see the increase in maximum prices is not too far off the estimate. We then extrapolate from this, to see when $2 million flats might appear:

Going by wage increment, we can hazard a guess of around 2039. 

The end-conclusion seems to be sometime in the late 2030’s, and before 2040.

As we wrote the article, one thing began to stand out: perhaps we should be more afraid of the rate at which average prices are going up, rather than the maximum prices. 

Affluent buyers who can afford maisonettes, DBSS projects, Pinnacle@Duxton, etc. can look after themselves; but the thought of average prices soaring past $700,000 is a worry. 15+ years is not a long time, and it is something the coming generation will have to deal with (in the resale market, that is). 

Hopefully, a combination of wage increments, and a healthy supply of new flats, will keep housing affordable.