Singapore Residential Insights by Nicholas Keong

Singapore’s residential market

The residential market in Singapore has been extremely resilient over the last two years, with around 10% growth in the price index in 2021 and a further 8.4% growth in 2022. With international travel restricted, Core Central Region (CCR) price index growth was limited – and outpaced by the Rest of Central Region (RCR) and Outside Central Region (OCR) growth.

As we emerged from circuit breaker and home buyers sought larger accommodation, the race for space heated up. Potential homeowners recognised the appeal of RCR and OCR options promising more sq ft for the same amount of money, and these segments also rolled out a majority of new launches. This led to a narrowing of the price gap on a per sq ft basis between RCR, OCR vs CCR, with the latter now showing relative value.

And with a lack of supply remaining a major concern in Singapore, rental costs went up by 21% as of Q3 2022. The tenant market has become ferociously competitive; given the attractiveness of the rental market, many sellers have capitalized on this especially if their asking prices were not met – and this hasn’t helped with supply in the sale market.

Despite the influx of new supply in the form of development launches and units completing, more is needed to meet demand. Overall, we forecast 5% growth in 2023.

Ultra-High-Net-Worth Individuals (HNWIs) in Singapore

They are attracted to Singapore for its education, safety, a strong dollar, and safe haven status. Pre-pandemic, foreign buyers accounted for approximately 5% of transactions across the whole market. During the pandemic, with borders closed, this percentage dropped to approximately 2.5%.

As of Q1 2023, with travel resuming somewhat, this figure rose to approximately 4%. We expect this to get back to pre-pandemic levels, as foreign buyers are returning to the market having been able to travel in, especially buyers from Mainland China.

However, the increase of such buyers is expected to remain small as a percentage of total transaction volume, which highlights the strength of the domestic market from both Citizens and Permanent Residents. We’ve seen PRs being very active in the market with a real motivation to purchase a home, which makes perfect sense with rents being where they are at the moment. For more information on UHNWIs, refer to The Wealth Report.

Advice for 2023

The strategy for property purchases in Singapore this year is exercise patience. We expect more options to emerge in 2023, especially in the prime market through new projects launched by developers and new inventory put on as sellers expect tapered growth given the economic environment.

Prices may moderate slightly, bolstered by Singapore’s strong fundamentals and long-term invest potential. Still, it is important to work with a trusted advisor who understands your goals, helps assess risks, plans your finances, and works with you on an exit strategy.

Three bright sparks for 2023

1. Expect an influx of new residential supply

There will be new development launches of 10,000 to 12,000 units, of which around (20%) will be in the CCR. Additionally, around 2,000 units will complete this year which will provide more options for buyers who have been facing limited choices.

2. Pricing will moderate

We forecast 5% growth in 2023, despite the current economic climate and potential challenges ahead underpinned by low supply, and strong underlying demand. We expect sellers who have been very bullish over the past 12 months to review asking prices, which may give them the chance to purchase at more favorable levels compared to the previous year.

3. The reopening of borders between Hong Kong and the Chinese Mainland

Coupled with Singapore's safe haven status, such developments are likely bring more wealth to Singapore, resulting in an uptick in activity in the Prime Residential market.

For more insights on the residential landscape, watch the on-demand recording of Asia-Pacific Residential Outlook 2023 webinar here and download the full report here.