Singapore’s property market remained resilient and stable for the first quarter of 2023

While resale HDB and private property are now at a record high, they are seeing a slower pace of price increase.

​By Khalil Adis

Jubilee Bridge in Singapore. Photo credit: Adhitya Andanu

As we enter the first quarter of 2023, Singapore’s property market is showing signs of resilience and stability after a turbulent few years. 

With a growing population, an expanding economy and a strong demand for housing, both the HDB and private property markets are expected to continue their upward trajectory. 

Here is a quick snapshot of what is happening in both the HDB and private property markets.
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HDB: Resale Price Index (RPI) is now at a record high

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

For many Singaporeans, purchasing an HDB flat remains the most affordable option for homeownership. 

“I recently bought an HDB flat in Sengkang, and I have noticed that prices have gone up significantly compared to a few years ago. However, it is still affordable compared to private properties,” said one recent buyer, Tan Siew Ling.

The HDB Resale Price Index (RPI) has been on a steady increase since 2019, and in the first quarter of 2023, it is expected to rise further.

According to the HDB’s flash estimates for first quarter of 2023 data from HDB, the RPI is now at 173.4 point which is an increase of 0.9 per cent over that in the fourth quarter of 2022. 

“This is a slower increase than the 2.3 per cent increase in the fourth quarter of 2022, and is the smallest quarterly increase compared to the last ten quarters,” said the HDB in its press release.
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Challenges

Older HDB flats in Jurong West. Photo: Khalil Adis Consultancy.

Nonetheless, the HDB market is not without challenges. 

For example, the price gap between newly MOP-ed flats and those in older HDB estates vary greatly.

One such buyer is Amy and Khai who are finding that newly MOP-ed 3-room HDB flats, priced at more than $400,000, to be beyond their budget.

With a combined monthly income of less than $3,000, CPF of around $30,000 and loan of around $180,000, Amy and Khai can only afford to purchase flats in older HDB estates.

In the end, they narrowed down their search to a flat in Jurong West to be near their parents to qualify for the Proximity Housing Grant.

While the asking price is significantly cheaper at $350,000, it comes with its own set of challenges.

For instance, Amy and Khai are subjected to a pro-rated CPF usage since the remaining lease does not cover the age of the youngest buyer up to the age of 95.

As Amy’s age is 30 and the remaining lease is 60 years, the couple’s HDB loan and Enhanced Housing Grant had to be pro-rated.

Fortunately, with the increase in Family Grant from $50,000 to $80,000, Proximity Housing Grant of $30,000 and Enhanced Housing Grant, the grants went a long way in helping the young couple finance their flat purchase.

“Our agent was very helpful in helping us do our financial calculations and recommend properties within our budget. Within one viewing, we decided to make an offer for the flat in Jurong West,” said Khai.

“The government has imposed stricter loan-to-value ratios on buyers for HDB flats with a remaining lease of less than 60 years. This has resulted in a slower market for older HDB flats,” said analyst, Lim Hui Shan.

Nonetheless, the HDB market is expected to remain stable and resilient.

“Resale prices ceased to increase for the first time since June 2020, putting an end to the historic price rally that lasted for 31 consecutive months, as most room types experienced no increases in February 2023 except for 3-room flats. Following the Budget announcements, first-time HDB resale flat buyers can now enjoy higher amount of grants which should ease any concerns on affordability. As such, we expect demand to remain solid for the rest of 2023,” said Pow Ying Khuan, head of research, 99 Group.

Private property market: Increase in ABSD has impacted luxury properties

Bungalows in the exclusive Sentosa Cove enclave. Photo: Khalil Adis Consultancy.

The private property market in Singapore has also experienced steady growth over the years. 

According to the Urban Redevelopment Authority (URA) flash estimates, the Private Property Index (PPI) has increased by 6.0 points from 188.6 points in fourth quarter of 2022 to 194.6 points in first quarter of 2023.

“I recently purchased a condo in Pasir Panjang and I’m really happy with my investment. I feel that the property market in Singapore is relatively stable and resilient,” said one investor, Johnathan Koh.

However, the private property market faces its own set of challenges. 

The government has imposed an increase for the Additional Buyer’s Stamp Duty (ABSD) for foreign buyers (from 20 to 30 per cent) and local buyers (from 12 to 17 per cent) purchasing a second property.

Analyst, Cheryl Lim, commented that “the ABSD has affected the demand for private properties, especially for high-end luxury properties. However, there is still demand for affordable and mid-range properties.”

Despite the challenges, the private property market is expected to remain stable and continue to see growth in the first quarter of 2023.
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In conclusion, the Singapore property market remains resilient and stable, with both the HDB and private property markets showing positive signs of growth.