Singapore Property Prices - Emerald Of Katong

Singapore’s real estate market is vibrant and dynamic, attracting local and international investors. This article explores current property price trends, factors influencing market changes, and insights for buyers and investors.

Whether you’re a first-time homebuyer or a seasoned investor, this guide will help you navigate Singapore’s property landscape with confidence.

Quick Summary

Private residential property prices in Singapore experienced a modest increase of 1.4% in Q1 2024, slowed by higher mortgage rates and seasonal factors, but demand remains stable as vacancy rates continue to decline.
Regional price differences show the Core Central Region (CCR) maintaining a premium with a narrowing gap to other regions, driven by strong demand in suburban areas despite higher prices in prime locales.
Executive Condominiums (ECs) are increasingly popular among middle-income earners, providing affordable, government-subsidized housing, with projected prices between $1,400 and $1,450 psf, offering both quality living and investment potential.

Current Trends in Singapore Property Prices

In the first quarter of 2024, private residential property prices in Singapore saw a modest increase of 1.4%, a notable slowdown from the 2.8% rise in the previous quarter [1]. This deceleration in price growth can be attributed to various factors, including the Hungry Ghost Festival and elevated interest rates that have tempered buyer enthusiasm.

High mortgage rates have become a significant factor influencing the demand for new homes. With domestic mortgage rates expected to stay at elevated levels compared to the past decade, many potential buyers are reconsidering their plans to enter the market.

This scenario has created a cautious atmosphere, where the affordability of homes is scrutinized more carefully, leading to a potential cooling effect on future price increases.

Nevertheless, the Singapore real estate exchange remains optimistic about the market’s resilience. The current landscape, characterized by a steady vacancy rate decline—from 8.1% in the previous quarter to 6.8% in Q1 2024—suggests that completed private residential units are still in demand.

As 2024 unfolds, the interaction of these factors will significantly shape private home prices and overall property market dynamics.

Regional Price Variations: Core Central Region vs. Suburban Areas

When comparing property prices across different regions of Singapore, a fascinating trend emerges. In the Core Central Region (CCR), prices of non-landed homes rose to S$2,087 per square foot (psf) in the third quarter of 2023, reflecting the premium associated with this prime location.

Meanwhile, in the Rest of Central Region (RCR) and the Outside Central Region (OCR), the dynamics are slightly different. Prices in the RCR increased to S$1,744 psf, while the OCR saw prices rise to S$1,421 psf in Q3 2023 [2].

This indicates a narrowing gap between the CCR and other regions, with the median price difference between non-landed resale homes in the CCR and RCR shrinking to 17.5%, the smallest since Q3 2001.

This narrowing gap is largely attributed to the pandemic’s impact on property preferences and the subsequent price adjustments.

Despite the higher price points in the CCR, demand remains strong in suburban areas. This sustained demand highlights the attractiveness of suburban living, where buyers find a balance between affordability and quality of life.

Executive Condominiums: The Affordable Alternative

Executive Condominiums (ECs) have emerged as a popular and more affordable alternative to private condos in Singapore. Designed to cater to the aspirations of middle-income earners, ECs are government-subsidized, making them a financially viable option for many young couples and families.

The projected price increases for ECs range between $1,400 and $1,450 per square foot (psf). This pricing makes ECs an attractive proposition for those looking to enter the property market without the hefty costs associated with private residential units.

Impact of Foreign Buyers on Property Prices

Foreign buyers have traditionally played a significant role in shaping Singapore’s property market.

Before the pandemic, they accounted for about 6% of all non-landed private home purchases. However, this participation has seen a decline, with foreign buyers representing an average of 4.7% of non-landed property transactions from Q4 2019 to Q1 2023.

This drop can be attributed to various factors, including the increased Additional Buyer’s Stamp Duty (ABSD) [3].

In April 2023, the ABSD for foreign buyers was raised from 30% to a substantial 60%. This significant increase has led to a marked reduction in foreign buyer activity, particularly in the Core Central Region (CCR), where transactions have remained under 200 units each quarter since 2018.

Public Housing Market: HDB Flats and Affordability

The public housing market in Singapore, particularly HDB (Housing and Development Board) flats, continues to experience price increases, raising affordability concerns. In 2023, the median price of an HDB flat stood at US$461,289, up from US$409,000 in the previous year [4].

The introduction of new BTO flat categories—Standard, Plus, and Prime—has added another layer of complexity to the market.

Plus category BTO flats, for instance, come with more subsidies but also tighter resale conditions, including a 10-year minimum occupation period.

While the HDB Resale Price Index (RPI) has increased for 14 consecutive quarters, the growth rate has slowed, with a 1.2% rise in Q3 2023 compared to 1.5% in Q2.

Additionally, the Loan-to-Value (LTV) limit for HDB housing loans was lowered from 85% to 80% in September 2022, further influencing market conditions.

These factors collectively shape the landscape of public housing in Singapore, where affordability remains a critical issue for many first-time homebuyers, and the urban redevelopment authority plays a role in addressing these concerns.

Rental Market Dynamics: Supply and Demand

The rental market in Singapore has been experiencing a slowdown in growth, influenced by increased supply and changing demand dynamics.

Here are some key statistics:

Private residential property rentals increased by 8.7% in 2023, a significant deceleration from the 29.7% rise seen in 2022.
The fourth quarter of 2023 marked the first decline in private residential rentals in over three years, with a 2.1% decrease.
This trend continued into the first quarter of 2024, with rentals falling by 1.9%.

A broad-based decline in rents was observed across all non-landed residential segments, with suburban rents experiencing the steepest fall of 2.8% quarter-on-quarter [5]. This cooling in the rental market is indicative of a shift in supply and demand dynamics.

The private residential vacancy rate, which fell to 8.1% in the fourth quarter of 2023, underscores the increased supply of rental properties. As more units become available, rental rates face downward pressure, providing some relief to tenants.

New Launches and Upcoming Projects

The Singapore government’s proactive approach to increasing the supply of private housing is evident through the Government Land Sales (GLS) program [6].

In the first half of 2024, the GLS supply for private housing saw a notable increase, with 5,450 units released. This effort aims to meet the rising demand for housing and stabilize property prices by ensuring an adequate supply of new units.

One of the standout projects in this landscape is the Cuscaden Reserve, which has been relaunched with prices starting from $2,800+ psf, down from an initial range of $3,327 to $3,830 psf. This price reduction of roughly 20% is strategically aimed at moving the remaining units quickly and avoiding a hefty Additional Buyer’s Stamp Duty (ABSD) tax.

Looking ahead, about 34,380 residential units could be available for sale in late 2024 or 2025, including supply from the GLS program.

This substantial pipeline of new launches is poised to significantly shape the property market by:

Providing more options for buyers
Helping to moderate price increases
Ensuring that the market remains dynamic and responsive to evolving demand patterns

The continued focus on new projects is expected to have a positive impact on the property market.

Sub Sale Transactions and Resale Condo Market

The condo resale market in Singapore has shown steady activity, with sub-sale transactions also playing a significant role. In the third quarter of 2023, there were 2,900 resale transactions, slightly down from 2,976 in the previous quarter.

Resale transactions accounted for 55.8% of all sales in Q3 2023, indicating a robust secondary market. The total resale volume for 2023 is projected to reach between 10,000 and 12,000 units, with overall resale prices expected to rise at a slower pace of 4% to 6%.

Sub-sale transactions have also been on the rise, with 355 sub-sales recorded in Q3 2023, up from 285 in the previous quarter. Sub-sales accounted for 6.8% of all sale transactions in Q3 2023, highlighting their growing importance in the property market.

The increased supply of resale properties is anticipated to help mitigate runaway home prices in the secondary market, providing more balanced options for buyers.

Government Policies and Their Effect on Property Prices

Government policies have a profound impact on Singapore’s property market, with recent measures aimed at ensuring prudence in borrowing and stabilizing property prices.

Effective from 15 February 2023, the following changes were made to influence buyer behavior:

Buyer’s Stamp Duty (BSD) rates were raised for properties valued over S$1.5 million.
Banks and HDB introduced a higher medium-term interest rate floor for housing loan eligibility from 30 September 2022.
The Total Debt Servicing Ratio (TDSR) was tightened from 60% to 55% in December 2021.

These measures demonstrate the government’s commitment to maintaining a stable property market, including the non-landed properties segment [7].

FAQs

1. What Are the Main Factors Influencing Property Prices in Singapore?

The main factors influencing property prices in Singapore include economic conditions, government policies, interest rates, supply and demand, and the overall market sentiment.

2. How Do Government Policies Impact the Real Estate Market in Singapore?

Government policies, such as cooling measures, additional buyer’s stamp duty (ABSD), and loan-to-value (LTV) limits, are designed to stabilize the market and prevent speculative buying. These policies can directly affect property prices and buyer behavior.

3. What Types of Properties Are Available for Investment in Singapore?

The types of properties available for investment in Singapore include residential (condominiums, HDB flats, landed properties), commercial (office spaces, retail units), and industrial properties.

Found this article helpful? Check out Emerald of Katong Condos for more tips on life in Singapore.

References: