The real estate landscape in Singapore is on the cusp of exciting changes, presenting great opportunities for potential homebuyers and savvy investors. 

To meet the strong demand for private housing,  the Government will be increasing the supply on the Confirmed List. In total, about 100,000 public and private housing units are set to be completed between 2023 and 2025, providing significant support to address housing needs in the coming years.

• The number of units on the Confirmed List for the 2H2023 GLS Programme will be raised to 5,160, up from the initial 4,090 units planned for the first half of the year, bringing the total supply on the Confirmed List in 2023 to 9,250 units, the highest level seen since 2013.
• Compared to the previous year, the supply for 2023 is almost 50% higher, and it is approximately 2.5 times higher than that of 2021. Furthermore, the Government has made sites available on the Reserve List that could yield another 3,430 units if developers assess there is demand for them.

In this article, we will dive into the details of the housing supply situation in Singapore and specifically on upcoming Build-To-Order (BTO) projects and new condominium launches. We will examine factors like location, pricing and the impact of increased housing supply, offering a comprehensive analysis of market dynamics that will empower you in your decision-making processes.

Build-To-Order (BTO)

Build-To-Order (BTO) projects are a vital part to many young Singaporeans. Only in Singapore, it is often used as an informal way to tie down the other partner in a foreseeable marriage.

Apart from the draw of securing your partner together with a prospective house, BTOs are also known as subsidized housing which aim is to provide affordable and quality homes for aspiring homeowners. 

In 2023, there will be a total release of 23,000 BTO flats, 9,923 in the first half and 13,000 in the second half of 2023. Let’s take a further look at the BTOs landscape for this year.

i. Past BTO Launches

In the May 2023 BTO launch, the flats in Bedok are competitively priced, with 4-room flats starting from $448,000 and 5-room flats from $588,000. This pricing strategy aims to attract potential buyers and cater to a diverse range of budgets.

Table 1: Flat Prices in May 2023 BTO Exercise

Image credit: HDB

Based on the last 2 launches (Feb & May 23) below table shows the starting price estimation based on flat type and town. Do note that these prices are based on historical data.

Table 2: HDB BTO Launch Prices

ii. Upcoming BTO Launches

To address the growing demand for housing, HDB has significantly increased the supply of BTO flats. The number of flats has been raised by 35% from 17,100 units in 2021 to 23,200 units in 2022, and is expected to reach 23,000 units in 2023, closely monitoring housing demand, ensuring a consistent and sufficient supply of flats. 

In Aug 2023, the Housing and Development Board (HDB) plans to release approximately 6,700 Build-To-Order (BTO) flats in various towns and estates such as Choa Chu Kang and Tengah in August 2023, followed by another offering of around 6,300 flats in towns/estates including Bedok and Bishan in November 2023. 

Table 3: August 2023 BTO Launch Projects (source from HDB portal)

 

New Launch Condos 

Apart from BTOs, the private property market is also set to witness new launches that cater to discerning homebuyers and seasoned investors. These projects often come up in highly desirable locations across Singapore. The pricing of these new launches is influenced by factors like location, unique features, and market conditions. 

For instance, The Reserve Residences is a luxurious condominium development coming up in Bukit Timah, offering opulent living, top-notch amenities, and unparalleled convenience, featuring direct access to Beauty World MRT Station and Bus Interchange.

i. Current Launches

Lake Garden Residences

Launched at slightly below $2,000 per square foot (psf), Wing Tai has expectations of rapid price escalation as units are sold progressively. For instance, one-bedroom-plus-study units spanning 527 sq ft are priced from $1.03 million ($1,954 per square foot), while three-bedroom units starting from 926 sq ft begin at $1.8 million ($1,944 per square foot).

Pinetree Hill

During the launch weekend, UOL-SingLand successfully sold 29% of Pinetree Hill, with an average selling price of $2,460 per square foot (psf). The developer initially released 400 units for sale at the same average price, resulting in a sales rate of 37.5% based on the number of units released.

Grand Dunman

During the launch weekend (July 15-16), Grand Dunman witnessed a strong demand with 550 out of 1,008 units sold, indicating a take-up rate of 54.6%. The average selling price achieved for the 99-year leasehold condo located on Dunman Road in prime District 15 was approximately $2,500 per square foot (psf).

 

ii. Upcoming launches

 

Impact of Increased Housing Supply on Buyers and Sellers: 

The rise in housing supply has a significant impact on how buying and selling play out in the market. More housing options give buyers greater flexibility and bargaining power, while sellers may face stiffer competition as they try to attract potential buyers. The increased housing supply will help to moderate price increases and stabilize the market in the long run.

In this scenario, sellers must position their properties strategically, emphasize unique selling points, and offer competitive pricing to stand out from the crowd. On the other hand, buyers need to carefully evaluate available options, considering factors like location, amenities, and potential for future appreciation, to make smart purchasing decisions. 

We also handpicked 2 articles for you:

• If now the right time to buy or sell your house
• Buying New Launch without selling HDB

Conclusion

Given the abundance of newly completed units and an increasing supply of both public and private housing, we are anticipating a further stabilization of property prices.

 

The Singapore property market is in a state of flux, influenced by factors such as interest rates, increased housing supply, and property cooling measures. In this article, we will delve deeper into these factors to help buyers and sellers understand the market dynamics and make informed decisions.

 

1. Interest Rates: A New Normal

Interest rates in Singapore have seen significant hikes in recent times and buyers need to be mentally prepared for any potential rise in interest rates. It is important to know that The U.S. Federal Reserve’s interest rate decisions have a significant impact on global interest rate trends, including Singapore’s.

In recent times, the U.S. Federal Reserve has been gradually increasing interest rates to manage economic growth and maintain stability. However, the pace of rate hikes has been slowing down since Feb 2023. From the Fed Reserve table below we can observe that during Sep-Nov 2022, the interest rate hike peaked at +0.75% compared to recent period Feb-Jun 2023 where the interest rate hike averaged to only +0.25%. 

Image credit: tradingeconomics

The outlook for interest rates suggests that we may be approaching a potential plateau or inflection point, indicating a potential stabilization or slower pace of increase in the near future.

Buyers need to be cognizant of this shift in interest rates and understand that the current level may become the new norm for a while. It is crucial to evaluate the affordability of mortgage rates based on this expectation. Consulting with financial advisors and mortgage specialists will provide buyers with insights into the potential impact of interest rate increases on their financial planning.

 

2. Increased Housing Supply: More Choices, Heightened Competition

To meet the strong demand for private housing, the government of Singapore has decided to increase the supply of new private housing units. In the second half of 2023, there will be 5,160 units available, which is a significant increase compared to the previous year. In total, there will be about 9,250 units available in 2023, the highest level since 2013. Additionally, developers have the option to initiate the development of an extra 3,430 units if they see market demand.

This increase in supply is part of a larger plan to address housing needs. In total, around 63,500 private housing units (including Executive Condominiums) are expected to be available. Between 2023 and 2025, approximately 40,400 units will be completed, more than double the number completed in the previous years. This is part of a larger plan to complete about 100,000 public and private housing units between 2023 and 2025, ensuring there are enough homes for the population.

The abundance of housing options provides buyers with a broader range of choices. This increased supply empowers buyers to take their time, conduct thorough research, and make informed decisions. Buyers can explore various property types, locations, and price ranges, enabling them to find properties that align with their preferences and budget.

For sellers, the higher supply means heightened competition. To attract buyers in this dynamic market, sellers should set realistic prices that align with current market conditions and property valuations. Collaborating with experienced real estate agents who possess in-depth market knowledge and pricing strategies is crucial for sellers to achieve successful transactions.

 

3. Property Cooling Measures: Maintaining Market Stability

On April 27th, 2023, the Singaporean government announced of the raise in the Additional Buyer’s Stamp Duty (ABSD) rates for certain types of property transactions. That was the third round of cooling measures since December 2021. The aim of this move is to promote a sustainable property market and prioritize housing for owner-occupation, while managing investment demand. 

Image credit: MND Singapore. Read more about the increase in ABSD here

Coupled with the 15-month wait-out period for individuals downgrading from private properties, industry experts have expressed agreement that these cooling measures have been somewhat effective in curbing the rapid rise in property prices and values. 

These cooling measures have been calibrated to moderate housing demand while prioritizing owner-occupation. Property seekers who are looking to buy for their own stay or HDB buyers will not be affected by these measures and will be provided with options for new flats. The government will continue to adjust its policies as necessary to ensure they remain relevant and promote a sustainable property market.

 

Conclusion

Navigating the Singapore property market requires a comprehensive understanding of the prevailing conditions and factors at play. Buyers should be mentally prepared for potential interest rate increases, factoring them into long-term affordability calculations. The increased housing supply offers buyers more choices but also intensifies competition among sellers, necessitating realistic pricing strategies.

Property cooling measures remain an integral part of the Singapore property market. Buyers and sellers should stay informed about the latest measures, such as ABSD, LTV limits, SSD, and TDSR, and consider their impact on transactions and market dynamics.

By staying informed, conducting thorough research, and seeking professional advice, buyers and sellers can make confident decisions in the ever-evolving Singapore property market. Remember that real estate transactions are long-term investments, and careful consideration!

Just as we’re ending the first half of 2022, we’re seeing the highest inflation we’ve seen in the last 10 years. The rising prices of food, electricity, petrol, and transport are hitting consumer wallets hard.

For current or would-be homeowners, that begs the question: will property prices continue to surge? Is now a good time to cash out or buy?

We took the opportunity to catch up with our team of senior property advisors on Singapore’s property market outlook for 2022. Here are the trends we’ll be watching out for through the 2nd half of the year.

 

A Quick Summary of 2021 – 2022

2021 was a great year for property, with private property prices jumping by 10.6% and resale HDB flats by 12.7%.

But why did the property market do so well last year? Let’s recap:

1. High Domestic Demand

In 2021, we saw:

• More people shifting to hybrid work arrangements and wanting larger homes as a result
• BTO and new launch condo delays pushing people into the resale market
• A willingness to pay a premium for more square footage, or just to have their own space given that everyone was trapped at home

2. Low Interest Rates Made It Attractive to Borrow More

The threat of COVID-19 still loomed large last year, and governments were hesitant to do anything that might threaten their already-fragile local economies. Part of that meant keeping interest rates near zero.

The result? It was cheaper than ever for the average consumer to take on a loan.

On top of that, many investors also took on debt to purchase assets like equities – and 2021 was one of the best years ever for the stock market. The returns they generated went back into the market, fueling asset prices even more.

3. Now, Both Sales and Rental Prices Are at Record Levels

This confluence of factors led to the sharp spikes in real estate pricing, bleeding into the rental market as well. In the first half of 2022, we saw the trend continue even as the restrictions lift and life returns to normal.

But the tide is already turning. The factors that fed the price growth last year are diminishing – and in some cases, reversing.

6 Trends to Watch Out for in the 2nd Half of 2022

Here’s what we predict may happen:

1. Property Prices Are Likely to Keep Going Up, but More Slowly Than in 2021

With many companies allowing WFH, the desire for more space hasn’t changed. About 31,000 HDB flats are coming off their Minimum Occupation Period (MOP) this year, and we expect a good percentage of those homeowners to look into upgrading.

Read also: 10+ Traps to Avoid When Upgrading from HDB

But with the market currently at a high, demand is likely to come from those upgrading from their current properties rather than those buying a home for the first time.

Those upgrading will be buying high, but also selling high – whereas those hoping to buy their first homes won’t have the advantage of asset appreciation to fund their purchases.

Compared to the 10.6% price growth for private property we saw in 2021, analysts predict that we might only see 1% to 4% for private property this year.

 

2. Owner-Occupiers Will Continue to Fuel Most of the Demand

Like last year, owner-occupiers may make up the majority of buyers in 2022.

That’s because the recent cooling measures (like the ABSD hike) affect foreigners and speculative buyers the most. Those buying for their own stay won’t really feel the impact of the property cooling measures.

On top of that, inflation and rising mortgage rates may dampen speculative buying. Singapore has always taken its cue from the US Federal Reserve. As the Fed increases rates, local home loan interest rates follow suit:

That means investors will need a lot more capital to fund a property purchase. Also, those buying at a high may worry about whether – or when – they’ll be able to offload the units for ample capital appreciation.

When we’re marketing multiple resale units in the same development, for example, we now see a lot less demand for studios and 1-bedroom units compared to 3-bedrooms. In the past, these studio and 1-bedroom units received a lot more interest from those buying a 2nd or 3rd property for investment or rental income purposes.

 

3. Buyers Will Be Driven Into the Resale Market

Similar to 2021, we may see a waterfall effect as BTOs and other construction delays continue to weigh on supply shortages.

Continued BTO Delays, Fewer New Launches

To date, 58 BTO projects (less than 60%) have been delayed by 6 months or more.

Although HDB plans to launch 23,000 flats yearly in 2022 and 2023, the situation remains volatile due to the continued supply chain disruptions and the re-emergence of COVID-19 in other parts of the world.

We’re also expecting fewer new condos in 2022, with most of them slated as 99-year leaseholds.

Still, demand remains high. Over 75% of the units in the recent Liv@MB launch sold within the first weekend. Two weeks prior, Piccadilly Grand sold 77% of its units on launch weekend.

Buyers wanting freehold – or hoping to move into the new place within the next year or so – will have to look at the resale market instead. Those who can afford ECs or private condominiums will consider these in comparison to resale HDBs, especially when taking into account higher COVs.

With demand growth outpacing supply, our property advisors believe prices won’t pare off until there’s a marked increase in supply. This will more likely happen in 2023 at the earliest, especially taking into account HDB’s commitment to increase BTO launches.

 

4. Rental Market Rates Will Remain High

With all these market forces at play, rental market prices are likely to remain high.

Read also: How to Determine Market Rental Rates for Private Property

That said, we think rental prices will also stabilise and grow at a slower rate. Border controls are easing and leases that were signed during the 2020-2021 lockdowns are starting to expire. We’re now seeing a greater supply of for-rent units, though demand also remains high with all the construction delays.

The government has also highlighted that there continues to be a labour shortage across industries, with unfilled jobs in Q1 2022 almost double from the same period in 2021. A corresponding increase in foreign workers and expats will bolster rental prices.

 

5. More New Record Prices for Older Flats (Premium for Space)

2022 has been a year of record-setting sales.

In May, we saw a 4-room HDB at Pinnacle@Duxton sell for S$1.228 million: the highest transacted price on record for a 4-room flat. This is just a month after a 5-room unit in the same development sold for S$1.228 million as well.

In the same month, a 4-room flat at Henderson Road transacted at S$1.4 million. Just last month, flats in Pasir Ris and Woodlands also saw transactions above the S$1 million mark. 

With many employees preferring to WFH, buyers will favour older flats over newer but smaller ones. (The average 4-room flat these days is around 86 square metres – compared to the 142 square metres of an Executive Apartment.)

Our analyst believes that the recent records for older 5-room HDB flats will set a new benchmark. The scarcity of jumbo HDBs and Executive Apartments (both no longer in production) will keep the premium for space high.

6. More Foreign Buyers in the Luxury Property Segment

Chances are that we’ll continue to see high demand from foreign buyers, especially in the luxury property segment. Singapore’s positioning as a tax haven and regional business hub with first-world infrastructure continues to make Singapore a popular outpost for wealthy family offices.

Geo-political tensions, both in the region and internationally, will continue to drive capital in a ‘flight to safety’ towards Singapore’s investment-friendly environment. In Q1 this year alone, Singapore’s Capital and Financial Account saw a balance inflow of S$76B – the highest ever on record.