Interesting Insights Into Singapore’s Property Market in 2023
The many happenings of 2022 led to it being one of the more turbulent years as of late, affecting various aspects of the economy. The property market in Singapore is no exception, with its new cooling measures and record-high interest rates to date. And while it’s prudent to expect more such obstacles this year, there are also silver linings to look forward to. Read on for some interesting insights into Singapore’s property market this 2023.
1. Increased BTO Supply
23,000 HDB flats are expected to be available in 2023 to meet the market’s increasing demand; currently, 2,900-3,900 new flats are set to crop up in locations including Tengah, Queenstown, Whampoa, and Kallang. While these properties will not affect resale demand immediately, it at least guarantees the flat shortage will end sooner rather than later. HDB has also stated that they are ready to launch as many as 100,000 flats in total until 2025, which may change as per monitored demand.
2. Higher interest rates and GST
The higher cost of home loans and pricier stamp duties could make properties less of an ideal investment. These higher rates, at the very least, could spell trouble for many as fewer buyers can be eligible for home loans without spending a higher cash outlay.
And when it comes to GST, it is not exclusive to the property market, and it is included here simply as a reminder that buyers must pay GST for services rendered by property agents. The rate is now at eight per cent as of 1st January 2023 and will increase by an additional one per cent next year.
That said, this GST increase will have a much larger impact on the world of commercial property as it remains subject to GST despite being spared from ABSD. While a small increase will unlikely make investors reconsider their decision, it is still a change that most people will be unhappy with.
3. Fewer launches than before
According to feedback from realtors, 2023 is expected to have a rather modest number of new launches compared to the past few years, considering the high demand and diminishing inventory. The number of new launches is estimated to be around 40, with two being new Executive Condominiums. But unlike previous years, there is only a single mega-development (1000+ units), which is expected to be located on Dunman Road.
Meanwhile, three large developments are set to rise at the Marina View, The Reserve Residences, and The Continuum. All in all, 11,000 new units are expected to open in the near future. This pales in comparison to the projects in recent years when developers could launch massive projects such as Parc Clematis, Normanton Park, Treasure at Tampines, etc., given that the need for them is now more important than ever.
4. Potential price moderation on resale flats
Moderating prices for resale flats are because of the wait-out period imposed by cooling measures during September 2022. With certain exceptions, homeowners looking to dispose of their private property are required to wait 15 months prior to becoming eligible to purchase a resale flat. Before this cooling measure came into effect, the market saw a record number of flat transactions reaching $1 million or more. This was due to right-sizers selling at a market peak and could afford the premium on executive flats, DBSS units, maisonettes, and so on, or even the increasing Cash Over Valuation (COV).
5. HDB upgrades could be priced out of new launches
The rising prices in the property market are expected to slow down this year, if for no reason other than the higher loan rates and the September 2022 cooling measures. However, there is little to no chance of new launches seeing significant price reductions. A 40 per cent increase in ABSD, higher Land Betterment Charge rates, and a five per cent commission for property agents in Singapore drive up costs. The narrow developer margins at present also do not permit many discounts.
During the pandemic, contractors charged significantly higher prices, and, as with most situations, these costs have yet to return to normal in the post-pandemic. The market has simply adapted to these higher prices, which further eats into developer margins. The norm going forward today seems to be that each square foot will cost about $2,000, even for suburban condos, which is out of the budget for many HDB upgraders, leading them to turn to the resale market for 2023.
Conclusion
All in all, 2023 is set to be another uncertain year for the property market and even the world in general, given the many ongoing geopolitical disruptions. As such, if you are looking to purchase or even sell your home, it is advisable to seek the assistance of a knowledgeable housing agent in Singapore. NeezaNizam is who you should turn to when it comes to these matters, as we are constantly kept up to date with the local housing market, from the ever-changing rules and regulations to HDB policies and CPF regulations, to name a few. To book an appointment, feel free to reach out to us here.
