Singapore property market outlook and predictions for 2023

Expect a period of correction for resale HDB flats and private properties which may favour buyers. Meanwhile, the rental market will continue to see strong demand favouring landlords.

By Khalil Adis

An upcoming Built-To-Order (BTO) project in Anchorvale in Sengkang. Photo: Khalil Adis Consultancy.

The cooling measures appear to have had an impact on the property market as it is now slowly shifting from a sellers’ to a buyers’ market.

Anecdotal evidence on the ground shows that sellers are more realistic in their asking prices while buyers are now able to get homes that are within their budget.

One such buyer is Ronald (not his real name) who is currently renting a room with his wife.

“We looked around in early November 2022 but prices for 3-room HDB flats that had recently achieved their Minimum Occupation Period (MOP) were not within our budget ranging from $420,000 onwards. Sellers were also not willing to budge on their asking price,” said Ronald.

However, in December, Ronald noticed that their asking price had started to come down at around the $400,000 mark based on listings on PropertyGuru.

Meanwhile, data from HDB say otherwise, showing that the median resale price for 3-room HDB flats in the third quarter of 2022 has remained somewhat consistent, ranging from $320,000 to $460,000 compared to $320,000 to $436,000 in the second quarter.

Sensing the market has turned, Ronald and his wife decided to make an offer for a corner unit in Bukit Panjang at $405,000 which was still lower than the asking price of $410,000.

With an estimated monthly mortgage of $1,137, Lee said buying the unit will be a much cheaper option than renting.

Ronald is currently paying $1.200 a month for his room rental.

Thankfully, his offer was accepted by the seller.

“The rent we are paying is currently quite hefty as rents have increased significantly by 20 to 30 per cent. Therefore, buying a house makes much more financial sense for us. Also, I am familiar with the area and it is within walking distance to Senja LRT station with plenty of amenities nearby,” he said.

Indeed, according to data from the Urban Redevelopment Authority (URA), rentals of non-landed properties increased by 8.3 per cent in the third quarter of 2022, compared with the 7.1 per cent increase in the previous quarter.

Meanwhile, data from HDB showed that the median price for the entire HDB flats for 2-room in the third quarter of 2022 was transacted at a median price of $1,930.

“Our completion is expected to be around March and April 2023 which we are looking forward to as we anticipate our rent to increase further. Finally, we are able to have our own home,” he said.

Sellers are more realistic

Scaled model of Tengah HDB estate at HDB Hub. Photo: Khalil Adis Consultancy.

Meanwhile, sellers are also willing to accept lower offers as the cooling measures take their bite.

One such seller is Siti (not her real name) who has been trying to offload her odd-sized executive HDB flat since July 2022.

Marketing her unit has proved to be challenging as her master bedroom comes with odd corners that make the placement of beds and cupboards difficult.

Nonetheless, Siti received various offers starting from $660,000 and then $620,000.

Subsequently, the sellers backed out due to various reasons.

She finally settled for an offer of $615,000.

Another seller adjusted their expectations for their 3-room HDB flat from $442,000 to $435,000 after numerous viewings.

“We noticed that buyers are now taking time to make an offer,” said the seller who wishes to remain anonymous.

HDB’s Resale Price Index (RPI) for the third quarter of 2022 showed that while the index saw an increase, it was slowed than the previous quarter.

In the third quarter, the index was 168.1 points which was an increase of 2.6 per cent over that in the second quarter of 2022.

This is a slower increase than the 2.8 per cent increase in the second quarter of 2022.

Meanwhile, resale transactions rose by 10.7 per cent, from 6,819 cases in the second quarter of 2022 to 7,546 cases in the third quarter of 2022. 

When compared to the third quarter of 2021, resale transactions in the third quarter of 2022 were 10.5 per cent lower.

Predictions for 2023

View of Suntec City from Rochor, Singapore. Photo: Jeda Hutchison.

Looking ahead, the HDB resale market is expected to cool further due to the incoming supply from its Build-To-Order (BTO) exercise.

This will mean buyers can anticipate the prices for HDB resale flats to come down to a more realistic level.

According to HDB, in November, it launched 9,655 flats for sale which was by far the largest BTO offering ever in a single launch.

Spread across 10 projects in both mature and non-mature estates in Kallang Whampoa, Queenstown, Bukit Batok, Tengah, and Yishun, around 60 per cent (or 5,861 units) are offered in non-mature estates. 

This makes up almost half the number of flats offered in non-mature estates in the whole of 2022

“The November 2022 BTO launch is the largest BTO sales exercise yet for HDB. The bulk of the almost 10,000 flat supply, or close to 6,000 new flats, are located in non-mature estates (NMEs). This number is in fact bigger than the total flat supply of a typical BTO sales exercise, thus offering a wide range of affordable flats for homebuyers. With 95 per cent of 4-room and larger flats in this bumper crop set aside for first-timer households, and additional ballot chances for them, we encourage first-time applicants to apply for flats in the non-mature estates to increase their chances of securing a new BTO flat,” said HDB’s chief executive officer, Tan Meng Dui.

When including the 1,071 units offered under the Sale of Balance Flats (SBF) exercise, a total of 10,726 new flats are offered in the November 2022 sales exercise.

Meanwhile, the rental market for both private and HDB properties is expected to heat up further as the incoming supply from private (49,384 units as of the third quarter of 2022) and HDB flats (10,726 units) will take a few years to come on stream.

Therefore, tenants may wish to exercise prudence by locking into a 2-year lease to mitigate any price increase.