In the last quarter of the year, the Singapore residential market is showing signs of further stabilisation, with cooling demand in both the public and private property markets. Similarly, the rental market, especially the private residential segment, is likely to cool.
More BTO flats were launched, drawing first-time home buyers away from the HDB resale market. More non-landed homes were also completed in 2023, as compared to the previous year.
The high interest rate environment, April 2023 property cooling measures, and uncertain economic prospects have dampened buying sentiments for non-landed homes. Likewise, elevated construction amounts, greater financing costs, and high asking prices for landed homes have pushed buyers to recalibrate their expectations.
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- Singapore Property Sale Market Index Q4 2023
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Get the Guru View: Key Findings of the Singapore Property Market Report Q4 2023
Macro Trends Observed in 2023
While Singapore’s economy continued to do well and unemployment rates remained fairly stable in a challenging climate, economic slowdowns and escalating geopolitical tensions have restricted more robust growth. In turn, property seekers are predicted to exercise greater caution which may lead to a further softening in housing demand.
While interest rate hikes have slowed in 2023, a high interest rate environment endures. In turn, property acquisition and borrowing costs remain high. However, the stabilising interest rates and mortgage rates translate to a reduced urgency for buyers and sellers to finalise purchasing decisions, potentially causing market activity to decelerate.
Additionally, the Singapore government has introduced a slew of housing policy changes to reign in the market and make public housing more affordable.
Singapore Property Sale Market Index Q4 2023
In Q3 2023, the Singapore residential market saw demand dipping across all segments. In the three segments, landed homes saw the steepest demand drop. Still, the value proposition of landed homes increased amid the uncertain economic climate, given its scarcity and limited supply.
Rising home acquisition costs and economic uncertainties were two factors that may have given would-be sellers some pause from putting their properties on the market. Foreign property owners also held back – under the current ABSD framework, these individuals faced high property replacement costs.
Looking ahead, we expect the unprecedented supply-driven price and demand pressures from the COVID-19 pandemic to alleviate. Transaction volumes will not reach 2021 or 2022 levels. The residential market is expected to continue moderating and prices are predicted to remain stable.
Regarding supply: approximately 30,700 units (including Executive Condominiums) may be available for sale in H2 2023 or in 2024, including 9,250 units from the 2023 Confirmed List of the GLS Programme.
Singapore Property Rental Market Index Q4 2023
The rental market in Singapore slowed in Q3 2023. As pandemic-induced rental demand pressures continue to abate, it is noted that demand has correspondingly declined. All signs point toward that the non-landed private property rental market has peaked.
About 9,000 private residential units (including ECs) were completed in Q3 2023. As local households moved into their newly completed homes, demand was alleviated. The increased supply boosted the number of listings for non-landed private properties, which put more downward pressure on rental prices.
Looking forward, asking rents should soften as further supply increases and pressure from domestic demand eases. Approximately, about 20,400 private homes should be completed in 2023, marking the greatest annual supply completion since 2017. Another 8,959 units are expected in 2024.
For the last quarter of the year, the property outlook remains uncertain with geopolitical tensions and a persistent high interest rate environment. Overall, we foresee 2023 ending with a muted close and the present challenges extending into 2024.
Despite the mounting challenges, we expect the sales markets to remain resilient. Sellers are unlikely to lower prices due to the lack of urgency to do so. Aside from being more cautious, buyers will likely adjust their expectations and spend more time in the market looking for their ideal home.
For more insights and analysis, read the full PropertyGuru Singapore Property Market Report Q4 2023:
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