2023 Singapore Property Market Review

In 2022, Singapore's economy grew by 0.2% quarter-on-quarter, with full-year growth moderating to 3.8%—a step down from the impressive 7.6% expansion recorded in 2021. A confluence of factors contributed to this moderation, including escalating inflation, rising interest rates, global COVID-19 lockdowns, and the Russia-Ukraine conflict.

The macroeconomic slowdown led to a decline in home purchases. HDB resale transaction volumes fell by 8%, from 29,181 units to 26,804 units, while private home sales plunged by 45.6%, from 33,673 units to 23,127 units. A dearth of new project launches further exacerbated these figures.

A pivotal milestone in 2023 was the World Health Organisation's declaration that COVID-19 no longer constituted a Public Health Emergency of International Concern (PHEIC). This announcement marked a turning point, setting the stage for the property market to stage a rebound and gather momentum after years of pandemic-induced headwinds.

Government Policy Interventions to Maintain Price Stability

On the back of a series of cooling measures, HDB resale prices rose by just 4.0% year-on-year, significantly slower than the 7.7% surge seen in 2022.

In September 2022, the Loan-to-Value (LTV) limit for HDB housing loans was lowered from 85% to 80%, alongside the implementation of a 15-month wait-out period for private property owners (PPOs) purchasing resale HDB flats. These measures effectively reined in HDB price escalation.

Condominium prices grew by 8.4%, moderating from the previous year's 9.1% gain. The government also rolled out several property curbs throughout the year: In February 2023, Buyer's Stamp Duty (BSD) rates for higher-value properties were raised by up to 2%; another round of cooling measures took effect in April 2023, dealing the heaviest blow to foreigners with Additional Buyer's Stamp Duty (ABSD) surging to 60% on any residential property purchase. This successfully cooled price growth across June and July, though the market staged a gradual recovery in the second half of the year.

Million-Dollar HDB Flats Are No Longer a Rarity

The number of million-dollar HDB resale flats continued its upward trajectory, climbing 25% this year and accounting for approximately 1.8% of total HDB resale transactions in 2023. Seven resale units breached the $1.4 million threshold, culminating in a record high of $1.56 million for a premium flat in Toa Payoh—underlining the robust demand for prime, centrally located units.

As the 15-month wait-out period begins to lapse for earlier private home downgraders, the market anticipates an influx of well-capitalised buyers. This serves as a potential catalyst for further price appreciation at the upper tier of the HDB resale segment, laying the groundwork for new benchmark valuations in public housing.

Potential Housing Supply in 2024

In the secondary market, the supply of completed private homes receiving their Temporary Occupation Permit (TOP) is projected to plunge from an estimated 21,125 units (excluding Executive Condominiums, or ECs) in 2023 to around 7,526 units in 2024.

Moderating Growth in the Condo Market in 2024

Heading into 2024, an estimated 29,350 units (including ECs) will be available for sale, with roughly 9,250 private housing units injected via the Confirmed List of the 2023 Government Land Sales (GLS) Programme.

URA data shows that condominium vacancy rates have climbed to their highest levels in a decade, with price growth reaching 8.4% by Q4. Based on historical data and prevailing trends, price appreciation is widely expected to ease.

While private residential price growth has yet to see a drastic pullback in 2023, transaction volumes have already begun tapering off. The resale market is anticipated to soften slightly. Historically, subdued transaction volumes have not significantly dented resale prices; however, against a moderating economic backdrop, condo resale price growth is poised to temper.

What Does This Mean for Buyers and Sellers?

For buyers—especially first-time home seekers—these shifting dynamics present a nuanced landscape fraught with both opportunities and challenges. Government cooling measures are actively shaping property valuations and available inventory, directly impacting buyer sentiment and purchase decisions.

Concurrently, sellers are adapting to a market continually reshaped by policy interventions. These regulatory shifts influence pricing strategies and the realisation of capital gains, particularly in light of the new public housing classification framework and forward-looking market projections.

Year-on-year growth in the private condo market is projected to taper further to around 5%–7%, down from this year's expected 8.4% pace.

New HDB Classification Framework to Reshape the Housing Landscape

The inaugural Build-To-Order (BTO) launch under the new classification framework is slated for the second half of 2024. Although HDB has yet to definitively demarcate all Prime and Plus precincts, Plus locations are widely anticipated to command premium valuations once finer details emerge. Existing resale flats in close proximity to designated Plus sites may enjoy stronger appeal among buyers, offering promising prospects for long-term capital appreciation.

Challenging Outlook Ahead for the Rental Market

Amid soaring living costs in the city-state, an increasing number of Malaysian professionals working in Singapore are capitalising on the favourable SGD/MYR exchange rate. Many are opting to commute from Johor Bahru to bypass escalating rental and living expenses in Singapore. This trend is visible across diverse demographics, from blue-collar workers to PMETs.

The surge in residential completions has exerted substantial downward pressure on the rental market. With an expanded array of choices, prospective tenants are increasingly inclined to transition into homeownership rather than continue leasing. Furthermore, the pool of former private property owners (PPOs) requiring interim rental accommodations during their 15-month wait-out period is projected to dwindle.