December 30, 2022
Singapore's Residential Property Market Weathering the Storm in 2022 and Looking Up in 2023
The residential property market in Singapore has been slowing down in the first three quarters of 2022 due to various factors such as cooling measures, inflation, rising interest rates, and a worsening economic outlook.
However, despite these uncertain economic conditions, the prices of private homes and HDB resale flats have remained strong.
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New home sales have been performing well due to limited supply, and the preference for larger HDB resale homes has continued, resulting in a record number of million-dollar flats being transacted in 2022.
While transaction volumes have started to decline as some buyers reconsider their decisions to purchase, new condo launches have been doing well due to pent-up demand and a lack of new projects on the market.
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The number of unsold uncompleted private residential units is 8.5% lower in Q3 2022 than it was in Q3 2021.
Prices in the Outside Central Region (OCR) have set new benchmarks due to the popularity of new condo launches such as AMO Residence, Sky Eden @ Bedok, and Lentor Modern. Higher costs for private homes have pushed some buyers towards the HDB resale market, and rising prices in private homes have encouraged private homeowners to sell and "right size" to a smaller unit or move to a larger HDB flat.
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As a result, there have been high transaction volumes of million-dollar HDB resale flats, with 111 HDB resale flats being sold for $1 million or more in Q3 2022 alone.
In response to rising property prices and interest rates, new property cooling measures were introduced in September 2022, including higher interest rate floors and a lowered Loan-to-Value (LTV) limit for HDB-granted loans, as well as a 15-month wait period for private homeowners looking to "downgrade" to HDB resale flats.
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Looking ahead to 2023, prices are expected to stabilize and sales are expected to decline due to moderation in price increases.
Some first-time buyers may shift to the rental market due to affordability constraints, but renting is seen as a temporary solution for short- to medium-term housing needs.
The government is increasing the supply of BTO homes and setting aside more homes for first-time applicants, as well as increasing the land supply for private housing under the Government Land Sales (GLS) Programme.
Inflation is expected to continue and the US Federal Reserve is expected to raise the Fed Rate, but mortgage interest rates are expected to moderate in H2 2023.
Prices are expected to remain at the current level or increase modestly in the first half of 2023, but this may change if the economy worsens significantly.
Conclusion:
the residential property market in Singapore has faced challenges in the first three quarters of 2022 due to various economic and market factors. However, despite these challenges, the prices of private homes and HDB resale flats have remained strong, and new home sales have performed well due to limited supply.
The market has also seen success with new condo launches and a decline in the number of unsold uncompleted private residential units.
Looking ahead to 2023, prices are expected to stabilize and sales are expected to decline due to moderation in price increases.
The government is taking steps to address affordability issues and increase housing supply, but it remains to be seen how these efforts will impact the market.
Inflation and rising interest rates are expected to continue, but mortgage interest rates may moderate in the second half of the year.
Overall, the outlook for the residential property market in Singapore in 2023 is uncertain and will depend on various economic and market conditions.
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Source: Yahoo Finance SG
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