Are you considering buying a home in Singapore? Are you wondering about the future of housing prices in the city?
If so, this blog post is for you! We’ll take a look at current trends and predictions for 2023 to give you an idea of what to expect. Read on to learn more about what could happen with housing prices in Singapore.
Overview of Singapore Housing Market in 2022
At the start of 2022, the Singapore housing market was on an uptrend, with prices growing steadily due to strong foreign demand.
The Urban Redevelopment Authority (URA) reported a 3.8% increase in private residential property prices in the third quarter of 2022.
Property professionals also predicted further growth for HDB resale prices, with PropNex forecasting a 6-8% increase for 2023.
However, with the September cooling measures and higher loan rates, the pace of rising prices is expected to slow.
Factors That Could Lead to Price Decline in 2023
Besides economic uncertainty, there are several other factors that could lead to a decline in housing prices in 2023.
High mortgage rates and the lack of liquidity in the market could cause people to reconsider purchasing properties.
Furthermore, cooling measures implemented by the government to curb speculation in the property market could slow down investments. Additionally, potential downturns in the global economy due to Brexit and the US-China trade war could weaken the Singaporean dollar and further depress housing prices.
As such, it is important for potential homebuyers to take into account these risks when determining whether or not to purchase a property.
Expectations of Property Market Professionals for 2023
Real estate professionals are expecting Singapore’s property market to remain resilient in 2023. Kiwi Lim believes the return of foreign buyers could boost demand for properties and strong upgrader demand could continue to prop up the market.
Savills Research projects that the price per square foot of mass market condominiums will be higher than what was recorded in 2022. Johnson from UBS also agrees that despite the uncertain economic outlook, housing prices are likely to remain stable.
With services sector performing robustly and a number of measures implemented to make housing more affordable, it is likely that there won’t be a sharp drop in prices in 2023.
Impact of COVID-19 on Singapore’s Property Market
The COVID-19 pandemic has had a significant impact on the property market in Singapore. The economic uncertainty and reduced demand for residential properties has resulted in a decrease in prices for private homes and HDB resale flats.
Furthermore, the introduction of the Circuit Breaker measures in 2020 had an adverse effect on transactions and created a lull in the housing market. This has caused some property market professionals to predict a decline in prices in 2023.
Effect of Septembers Cooling Measures on Price Growth
Despite the potential for a slowing of the property market in 2023, the impact of the cooling measures implemented in September 2022 remains to be seen. These measures were designed to reduce demand and encourage responsible borrowing practices, and they could have a significant effect on prices in 2023.
The Singapore government introduced a series of new cooling measures in September 2022, including an increase in the minimum cash down payment for private home buyers from 10% to 25%. Additionally, the total debt servicing ratio (TDSR) was increased from 60% to 65%, which requires borrowers to have higher incomes relative to their loan size.
These measures make it more difficult for buyers to afford private residential properties, which could lead to a decline in prices in 2023.
Potential Roles of Foreign Buyers in 2023
With the potential return of foreign buyers in 2023, it remains to be seen if this will have any effect on the property market. According to real estate professional Kiwi Lim, there is a possibility that foreign buyers will contribute to a move towards more of a buyer’s market.
This may be beneficial for investors as it would potentially lead to more competitive prices in the market. On the other hand, if foreign buyers become more active in the market, it could lead to higher prices as demand for property increases.
UBS Report on Singapore’s Property Market Imbalances
UBS Group’s Global Real Estate Bubble Index revealed that MOST cities in their report were overvalued or at risk of becoming overvalued. Singapore’s housing market was an exception, with the report noting that government regulations had reined in the growth of property prices.
This is important to keep in mind as we consider the potential impact of housing prices in 2023.
Rise in Rental Prices for 2022-2023
The rental market in Singapore is seeing a surge as well, with prices increasing 8.5% in the first half of 2022.
Overall private residential rents experienced a 20.8% year-on-year increase as of the third quarter of 2022, and this trend is expected to continue into 2023. This means that those looking to rent or invest in the rental market may have to be prepared for higher prices.
Comparison of Singapore and Hong Kong’s Property Markets
As the effects of higher interest rates and cooling measures begin to take a toll on Singapore’s property market, it’s worth considering the similarities and differences between Singapore and Hong Kong’s property markets. Home prices in Hong Kong are set to plummet by as much as 30 percent by the end of 2023, according to Goldman Sachs.
In comparison, Singapore home prices are expected to increase by 11 percent by the end of 2022, but rental and price growth may slow down in 2023. With foreign buyers potentially playing a bigger role in Singapore’s property market next year, it’s important to note that investment professionals and economists are uncertain about what lies ahead for both Hong Kong and Singapore in 2023.
Conclusion: What to Expect in 2023?
Despite the uncertainty of the global economic situation and the potential for a drop in demand from overseas buyers, there are positive signs for the Singapore property market in 2023.
The country’s housing market has remained buoyant and transaction volume has withstood seasonal tapering. With more private homes scheduled to be completed in 2023, the pace of rental price growth is expected to gradually slow down.
Furthermore, UBS has reported that Singapore’s property market is balanced, meaning that home prices are unlikely to drop in 2023. W
ith interest rates potentially falling by 2023 and foreign buyers still playing a role in the market, Singaporeans can expect the housing market to remain stable in 2023.