Updated: Apr 6
2022 saw a turbulent year with the implementation of various cooling measures, increase in home prices, accelerated interest rate hikes, geopolitical tensions, and macroeconomic uncertainties. Despite these challenges, the demand for housing did not falter. Both buyers and sellers will have tons of questions on the property market this year in 2023. Is this year a good time to buy property? Are prices too high? What should my plan be? Although it is impossible to predict the future and accurately answer these questions, we are able to provide insight into the local property market.
Resale Flat Prices May Stabilize
The pace of price growth in the resale flat market may be eased by price resistance caused by buyers being more cautious in their decisions as housing affordability remains their key concern. With the 15-month wait-out period (for private home sellers) implemented last September alongside the higher Mortgage Servicing Ratio (MSR) and Total Debt Servicing Ratio (TDSR) floor rates as well as the increased BTO supply this year, resale flat prices may see a drop in momentum. However, a major price correction is not expected.
Rental Market May Become Stronger
Due to affordability restraints and the return of expatriates as COVID-19 subsides, the prospect for the rental market looks to be promising. Even though renting is seen to meet short to medium-term housing needs, the demand may be strong enough to supplement the rental market. Landlords may also see an increase in demand from local tenants as these tenants seek a temporary place to stay while waiting for their new home to complete construction or extra space for work from home purposes.
Rental prices are also expected to stabilize this year with more supply coming in and intense competition to get tenants. However, these factors may not be enough to cause an excessive drop in rents with prices predicted to grow at a slower pace due to sellers having the holding power, higher living costs, property taxes, and an increase in mortgage payments.
Increase in Supply of BTOs
23,000 BTO flats are expected to launch this year to help meet demand. Although this will not immediately meet the entirety of the market’s demand, it is a sign that shortage will not be permanent. HDB has also mentioned that they are prepared to launch up to a total of 100,000 flats in between 2021 to 2025 as they continue to monitor demand.
Good Buying Opportunities in Private Homes
Buyers will have more options with more than 20,000 private homes expected to be completed in 2023. This includes landed properties, condominiums and executive condominiums (EC), and makes it the highest number of condos that will reach their Temporary Occupation Permit (TOP) in 7 years. Half of the projects are located in the Outside Central Region (OCR) or the suburban area. With the number of expected projects to be completed this year, it will hopefully help ease the supply crunch in the market which led to steep price increases.
Fewer New Launches Compared to Previous Years
The number of new launches this year is said to be quite modest when compared to that of the past few years and also given the increasing demand. With an estimated 40 new launches, only one of them will be a mega-development with more than 1,000 units. Merely three large developments of more than 700 units are expected, namely The Continuum, The Reserve Residences, and a Marina View site.
New Launches Prices Remain High
Despite the rate of price increase expected to slow down this year, there is little chance that new launches will see a price drop with the many costs faced by the developers. From an increased Additional Buyer’s Stamp Duty (ABSD) of 40% (5% of which is non-remissable), higher Land Betterment Charges, on top of increasing land cost, developers are challenged to set more affordable pricing. With contractor services also seeing a price increase ever since the pandemic happened, the local property market has adapted to a higher price point.
Demand should tamper within the first half of the year while prices may moderate or increase at a slower pace. Unforeseen circumstances will likely affect these situations, so do take note of that. Don’t hesitate to reach out to us should you have more questions!
While great care was taken to provide accurate information, no responsibility will be taken for any inconvenience caused by errors or omissions. The information provided in this article is for reference and educational purposes only.