Robust Property Market Demand May Provide Buffer Before Further Policy Adjustments

Since Singapore's private residential market heated up last November, speculation has grown regarding whether the government might intervene once again. However, analysts generally believe that current demand is backed by economic fundamentals rather than a speculative bubble, making the rollout of fresh cooling measures unlikely in the near term.

Stable Market Demand Drives Resilient Private Home Sales

In November last year, the local new non-landed private home market experienced a surge, with 2,871 units launched and 2,560 units sold within a single month. This brought the full-year totals to 6,647 new private home launches and 6,469 units sold.

This momentum has carried over into this year, with several new private residential launches recording stellar performances during their debut weekends. The Orie sold 86% of its units, Parktown Residence achieved an 87% take-up rate, while ELTA and Bagnall Haus each moved 65% of their units.

Strategic Pricing Fuels Sales Momentum as Developers Retain Flexibility

The buoyant market reception can largely be attributed to relatively sensitive and accessible pricing by developers.

Typically, developers aim to move around 70% of units at an attractive benchmark price over launch weekend, allowing them the flexibility to adjust prices in subsequent phases to maximise margins over the coming years.

A complete sell-out right at launch does not align with a developer's long-term strategy, as it may force them to replenish land at higher costs without a hedge against future market fluctuations.

Government Unlikely to Intervene in the Near Term

Analysts interviewed generally agree that the government will not introduce cooling measures solely due to robust sales at individual projects.

Should a new project in the Outside Central Region (OCR) command a median price 10% to 15% higher than preceding launches and sell out almost completely on its launch weekend, the likelihood of government intervention would increase.

The government focuses more closely on broad macro indicators, such as whether private home price growth outpaces economic growth, and whether excessive leverage or speculative activity is present. Thanks to existing cooling measures, the market remains on a healthy footing.

Fundamentals Support Demand with Affordability Largely Intact

The strong demand over recent months has primarily been driven by household wealth accumulation and softening interest rates.

From 2020 to 2024, average annual demand for new private homes stood at around 8,600 units, relatively stable compared to 8,937 units in the previous five years. Moreover, the median price-to-income ratio for 650 to 900 sq ft units fell from 13.8 in 2010 to 13.4 in 2024, reflecting resilient housing affordability.

Currency and deposits held by resident households grew by 157.6% between 3Q 2010 and 3Q 2024, empowering more buyers to afford private housing.

Intervention Likely Only if Home Prices Surge Rapidly

If the private residential property price index climbs by 3% or more quarter-on-quarter in the first quarter of this year with no signs of easing, policymakers may consider stepping in with cooling measures.

Should the government choose to act, it could tweak the Additional Buyer's Stamp Duty (ABSD) to curb investment demand, or recalibrate the Total Debt Servicing Ratio (TDSR) to rein in owner-occupier borrowing.

Authorities could also tighten the Loan-to-Value (LTV) limit and TDSR threshold to counter aggressive bidding sparked by declining mortgage rates.

As cooling measures invariably have ripple effects across the broader economy—including construction, advertising, and media—the authorities are expected to weigh their decisions with great caution.

If a new round of property curbs were to be introduced, it would more likely take place later in the first half or in the second half of this year.

Market Sentiment and Policy Watch: Buyers Urged to Stay Prudent

Speculation surrounding property curbs could inadvertently fuel fear of missing out, prompting prospective buyers to commit earlier and driving up short-term transaction volumes.

With market demand supported by solid fundamentals and price growth largely measured, the near-term likelihood of government intervention remains low. Nevertheless, market dynamics warrant close observation, and buyers as well as investors should stay prudent, avoiding the temptation to chase prices blindly.