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Property Prices 2023 - Where Are We Heading?

It wasn't too long ago that we were talking about the property market at risk of weakening. An “oversupply” in the number of newly launched private residential units was touted as one of the scariest points to behold – that year was 2020.

News headlines about the Singapore property market weren't very positive in 2019 and through to the start of 2020

Prior to 2020, prices had been in a gentle decline for over 6 years, with only a slight rebound between 2018-2020 showing up in response to a surge in collective sales transacted in the years prior. Even if we believed property prices would continue to grow in the long term, economic uncertainty brought about by the Covid-19 Pandemic plus fears of looming oversupply made it sensible for us at that time to judge that any upswing in prices was unlikely to materialize until at least a few years later.


However, we all know that was not the case at all. Since then, the property market has gone through a full cycle of euphoria with the key URA Private Residential Property Price index showing a tremendous 27.4% gain between July 2020 and September 2023 - almost double the gains achieved over the 3 years prior. The excess in unsold new private residential units has also been almost fully taken up. What we used to think was worth $1200psf could today be selling at $2000psf.

Both residential property price indices have moved upwards sharply since Q2 2020

What Happened?

There have been many suggested reasons for the sharp and unexpected upward trend in prices being printed out in the press and marketplace. Indeed, there were a mix of extraordinary circumstaces that came into play. However, amidst all the noise we believe the market move was sparked by two main factors:

  1. A burst of interest amongst many in upgrading to a bigger and/or nicer home

  2. Delays in HDB BTO construction, pushing a surge of buyers to look for other housing options

Together, these two factors first drove a surge of property buyers onto the market, resulting in an excess of demand over available supply. It doesn't take much to tip the market off balance and as we saw very quickly, property developers and resale sellers responded by raising their prices.

It seems that some people with nowhere to go and nothing to do during Singapore's 'Circuit Breaker' months were entertained by my hardworking real estate colleagues through webiners and social media content - the outcome of which was a surge in interest in property buying - perhaps!



This started a chain effect with an exploding number of buyers and sellers joining the party – the height of which saw many buyers willingly paying ever-increasing prices fearing that prices would rush even higher ahead of them.

Fast Forward to Late-2023

The market remains at an all time high and it’s probably difficult to predict exactly when this current market upswing will indeed end (or rather, what constitutes an “end”). However, the numbers in recent months suggest that the euphoria may finally be slowing.


On the ground, property agents (if they’re realistic with themselves!) will tell you that in general, responses to their For-Sale listings have been slowing throughout 2023. Overall, transaction numbers (HDB resale, new sale, resale & sub-sale) have all dropped and are now back at pre-2020 levels.

Since Q4 2022, transaction volume has fallen back towards pre-covid levels. The consequence of a pull back in demand could be the end of the current upswing in prices.


It appears demand may be cooling, implying that the number of buyers on the market have balanced out against the number of sellers.

So What's Next? Where Are Prices Likely Heading?

If we examine transaction numbers over the past 15 years, it’s possible (and not surprising) to notice a certain trend: property prices tend to move upwards when transaction volume surges.

Whenever demand rises above the "usual" quantity (demarcated by the horizontal orange line), we can see that prices start to run upwards. Conversely when demand falls back below, prices ease off.

With transaction volumes today falling back into the "usual" range, there's a good chance that prices will be heading for a period of stagnation again, as they did between 2013-2018.


However, I have to be mindful that the last time I evaluated the market this way, things went the complete opposite way (darn.....). But, to give myself some credit, I did point out that it will take a couple of extraordinary circumstances to move the market - and we indeed had those take place.


Today though, the property market does appear a bit more fragmented because of sizeable price gaps that have formed between different property classes - public housing, private non-landed and landed. It may no longer be possible to assume that all properties will rise together in value. Let’s look at each one of them and their prospects for the rest of this decade.

HDB Resale Flats

There’s no two ways about this – HDB flat values are supposed to depreciate to zero by the end of their 99-year leases and; at this time, there’s no realistic possibility for the government to rescue the ever growing number of ageing flats through SERS or lease extensions.


It’s useful to note that historically (including between 2020 to 2023) HDB resale price index surges have been attributed to short-term supply shortages. In the most recent price upswing, BTO delays due to Covid-19 supply chain shortages were to blame. However, we know from HDB's many press releases (and a certain Desmond Lee's ramblings) that all that is history and HDB will be building BTO flats at an accelerated rate from here on. In addition, there’s the question of older HDB flats and what will happen to them when the older generation passes on and these flats grow vacant. All of these spell supply in the face of slowing population growth.

100000 flats - which will completed in the next 2 years - is equivalent to the total number of flats built over the past 6 years. That's a sharp increase in number!

The prospect of supply continuing to grow, coupled with lease decay setting in does sound worrying for overall HDB values.


When the current uptick in prices peaks – as it is likely to soon, I believe a gradual decline in HDB prices, as seen between 2013-2020 may well be on the cards. Time to sell off your old HDB flat perhaps?

In the absence of sufficient BTO flats available, buyers bring their demand to the resale market. The inevitable result is a rise in prices.

Non-Landed Private Property (Condominiums)

The non-landed private property sector is where we will probably see the widest variations in performance. It is a fact that in some districts, today's new launch projects are priced almost 80% higher than their counterparts launched merely 3 years ago.


This has created disproportionate price gaps between the older and newer condominiums.

Daintree Residences is transacting at a psf almost 80% higher than its neighbour, High Oak Condominium. Is the extra 21 years of land lease (for Daintree) worth an 80% premium?

There is a possibility that these price gaps may eventually narrow to accurately reflect only the difference in the values of their remaining land leases and; in this case the older properties will have a better opportunity for price growth.


This leaves those who have bought recent new launch projects vulnerable – will they be able to sell with gains on the resale market in the near future?


While some may argue that land scarcity coupled with growing affluence will result in land prices rising perpetually, I am more in favour of believing that there is a psychological level beyond which buyers will lose interest in spending on a property. There is a strong basis to feel that new launch project prices have risen too far too fast and buyer fatigue appears to be setting in – the most recent project launches have not sold as quickly as those launched over the past two years.


Property developers could turn cautious on bidding for new land and; given the stringent requirements on them (including the need to build and sell all units within 5 years or lose their hefty 35% ABSD remission), may be forced to moderate their prices.


In summary:

  • Older developments may still see price gains

  • New developments may struggle to achieve gains on the resale market

  • Future launches may be priced more conservatively at or around current launch prices (rather than a step higher at each launch in the past few years)

Landed Property

The prognosis for Landed Properties should remain rather straightforward. Land is scarce in Singapore, plus most landed property land is freehold. As affluence grows among the local population, we have to assume demand for land ownership will continue increasing.

Landed property prices have grown ahead of Non-Landed (Condominiums, Apartments) prices since the early 2010s.

However, the equal interest amongst Singaporeans in owning condominiums (and occasional aversion towards “having to maintain a landed property”) plus high quantums could help keep demand in check.


Generally, landed property prices should remain on a gradual upward trend.

Other Factors To Consider

Across the board, the property market may also get affected by a few suppressive factors:

Long-Term Supply & Demand

Singapore's total population has been relatively steady over the past decade. We obviously do not have a homeless-ness situation here since almost everyone already has a home to live in - whether its with their parents, in a rented apartment, etc. This suggests that we have a sufficient number of homes for the population at this level.


However, homes are still being built, while the number of vacant units in Singapore are growing. Somewhere out there are homes that are emptying out, left vacant - and they may well go on the resale market at some point.

Following a record number of units being completed in 3Q 2023, the overall vacancy rate has shot up to nearly 8.44% - a number not seen since 2015-2016 when property prices were at their weakest over the past decade.

(Note: Units counted as "vacant" are owned, i.e. "owned by somebody, but left unoccupied")


Without a substantial growth in resident population...or removal of supply (e.g. through enbloc sales), it is possible that we could be going into an oversupply situation. This will definitely put downward pressure on property prices.


(As of September 2023, Singapore's Total population appears to have surged 5% from a year ago. However, the majority of this growth (80%) comes from non-residents - people who are most likely to end up only being rental tenants on the property market)

High Interest Rates

Interest rates have risen sharply over the past 3 years from near zero to a painful 4-5%. At this point, based on global economic circumstances it’s hard to see it coming down any time soon. A continued high interest rate environment could suppress demand for high-quantum properties as buyers feel the pinch from the higher monthly instalments and will be more reluctant to increase their loan exposures.

Lease Decay & Ageing Properties

It is worth noting that there are a growing number of leasehold properties – both private and HDB – that are reaching 30 or 40 years in age. In theory these properties will one day be left with near zero value.

Property developers in future could have as many as 8x the number of collective sale options to choose from as compared to back in 2018 (the last enbloc 'wave').

While private properties have historically looked towards collective sales as an exit strategy, developers may no longer find it necessary in the near future to bid aggressively to acquire them since supply of such older estates will be increasing.


We do not have any precedence in Singapore or the region with which to predict the true impact of lease decay on property values on a wider scale, so this will be something to watch as properties here grow older and; I believe over the next 10 years, lease decay will begin having a suppressive impact on property values.

Changing Mindsets Towards "Upgrading" & Public Housing Policies

This may be a bit more difficult to quantify, however there are tiny signs that suggest mindsets towards property upgrading may be changing. If I were to pin a cause for this change, it would be the price gap between HDB resale units and private properties. Perhaps buyers are realising that moving from a spacious 4-room flat to a 900sqft 3 bedroom condominium unit and paying 3x the mortgage isn’t exactly a lifestyle upgrade.


In fact, the phenomenon of million-dollar HDB flats could actually be evidence of this – where rather than squeeze their bank accounts for a condo unit, buyers would rather pay a premium COV, ignoring the risk of a future resale loss, to secure a choicer but yet (still cheaper) HDB unit as they see it as a long term home.


In addition, public housing policies have been changing – most notably with the introduction of the “Plus” and “Prime” location housing models. These may further push a shift in the mindset towards home ownership as being for the much longer term. The age-old mindset of flipping BTOs for a profit after MOP and upgrading to a private property may be fading away.

In Conclusion...

It is honestly difficult to call a direction in property prices. As a Real Estate Salesperson, remaining optimistic usually works to my advantage (no one wants to deal with an agent telling you property prices will crash!). Honestly speaking, as the old saying on Wall Street goes – markets are driven by fear and greed – and it sometimes seems that the prevalent “fear” we have in Singapore is the fear of missing out (“fomo”). As long as property agents keep selling an upbeat picture of the property market to keep people fomo, there’s nothing to stop buyers from anxiously paying higher asking prices and pushing price indexes higher.


However, as I have laid out in this editorial, there are genuine market fundamentals worth considering that could slow or negatively impact property prices in general as we progress into 2024 and beyond. We are entering, perhaps, a new era in Singapore's growth story where consolidation may be the prevalent theme.


I again believe the realistic scenario will be for prices to level off and stagnate for a few years. But as the experience of the past few years has shown us, all we need is for the balance between supply and demand to roll a little to the side of the latter and prices could run northwards (or even southwards!) pretty quickly – be ready for that when it happens!


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