Why are HDB resale prices so high?

Open the property pages on any given week and you will find a flat that sold for a number nobody quite believes, followed by the usual chorus of explanations: speculators, sellers cashing in, the government not building fast enough. Like most of the property market, HDB resale prices climbed strongly through 2025, with popular estates rising by something like 7 to 9 percent, before the Resale Price Index slipped about 0.1 percent in early 2026, its first quarterly fall since 2019. That is the story. The economics underneath it is calmer, and it is the most basic tool in the subject doing exactly what the diagram says it will.

Strip the headlines away and the high prices are built from two syllabus pieces you already have: a demand curve that has shifted firmly to the right, and a supply that, in the short run, can barely move. Put a rightward shift in demand against a steep, relatively fixed supply and the result is almost entirely a higher price. Once you can read the housing market this way, you can read most price stories the same way, and you can write the better half of an A level answer on government intervention while you are at it.

The forces pushing demand up

Start with demand, because that is where most of the movement has been. Three things have been pulling the demand curve to the right at the same time, and a strong answer names all three rather than gesturing at one. The first is population. At the COVID low point a great many foreigners left Singapore, and demand for housing softened with them; since then the population has rebounded back towards and beyond where it was, and more people in the country means more households wanting somewhere to live. The second is interest rates. For years the cost of borrowing was low, and cheap mortgages prop up property demand, because a buyer is really paying for the monthly repayment, not the sticker price, so low rates let people bid more for the same flat.

The third is preferences, and it is the quiet one. More people now want to live on their own rather than stay in the family home, whether that is young singles, couples forming households earlier, or families splitting across more dwellings. When the same population wants more separate homes, the number of households rises faster than the number of people, and housing demand rises with it. None of these is a scandal. Each one shifts the same demand curve to the right, and together they shift it a long way.

A supply that cannot move

Now the piece that turns rising demand into a sharp price rise: supply. The stock of resale flats is close to fixed in the short run. You cannot conjure more existing flats into the resale market on demand, new flats take years to design, build and reach their minimum occupation period before they can be resold, and an owner can only sell once. So the resale supply curve is steep, or price inelastic: however high prices climb, the quantity of flats available this year barely responds. Supply has stayed relatively low and slow to adjust while every one of those demand forces was pushing the other way.

Put a firm rightward shift in demand against a steep, inelastic supply and the adjustment is forced almost entirely into the price, with only a small change in quantity. There is no slack in the short run for supply to absorb the extra demand, so the price climbs. That is the diagram below, and it is most of the explanation for why a flat costs what it does today.

Read it off the figure. The demand shift is meaningful but not wild. What makes the price move so much is the steepness of supply: because quantity can hardly respond, the equilibrium climbs steeply up the supply curve and almost all of the change lands in price. Flatten that supply curve, make it more elastic by getting many more flats to market quickly, and the same demand shift would raise the price far less. The high price is as much a story about a supply that cannot respond as about demand that rose.

Mr Toh's take

Here is how I would put it to a class. Like the rest of the property market, HDB prices have been very high for one simple reason: high demand meeting low supply. On the demand side I would point to the three things together, the population rebounding from the COVID low point when many foreigners had left, the long stretch of low interest rates that props up property demand, and the shift in preferences, with more people wanting to live on their own, which raises housing demand. On the supply side, housing supply has stayed relatively low. That is the whole of the price story, and it is just demand and supply.

But here is the part I most want a strong student to reach for, because it is where the marks live. The cooling measures previously worked, and worked well, to stabilise the property market and keep it from running away. The trouble is that those same cooling measures have now left the market relatively rigid. Measures that dampen demand and restrict who can buy and when they can sell also reduce how responsive the market is, so it adjusts less smoothly than it otherwise would. A policy can stabilise a market and reduce its responsiveness at the same time, and noticing that tension is exactly the judgement an evaluation question is asking for. That is the difference between describing the price and actually thinking about it.

A policy can stabilise a market and make it less responsive at the same time. Noticing that tension is the evaluation.

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