Singapore’s property market outlook for 2023 is predicted to see a return of foreign buyers and strong upgrading demand from Singaporeans, even with higher home loan interest rates in the country. In this article, we will take a look at the factors that are expected to shape the property market in 2023 and their potential impact on buyers and investors.
Impact of Easing Border Measures
The easing of border measures for fully vaccinated travellers announced in April 2022 has led to an increase in the number of tourists and correspondingly the number of foreigners buying new and resale residential properties in Singapore. According to real estate professionals, the top 5 nationalities buying residential properties in 2022 are China, Malaysia, India, the USA, and Indonesia.
The number of homes in the Core Central Region (CCR) sold from April also shot up. Developers sold 361 units per month in the CCR in 1Q 2022, which jumped by almost 60% to a quarterly average of 577 units in 2Q and 3Q 2022. Sales of homes in the CCR increased on the resale market as well, but by a smaller 36%.
Foreign talent is steadily returning to Singapore, as Singapore’s non-resident population nears pre-pandemic levels of an estimated 1.7 million. Additionally, China’s wealthy citizens are increasingly seeking safe havens to park their assets and funds beyond the reach of Beijing’s common prosperity drive. In the first eight months of 2022, 425 luxury condos were sold in Singapore, with around one-fifth of those sales going to Chinese home purchasers.
Supply of New Homes in 2023
The supply of new homes is expected to pick up in 2023, with an estimated 10,000 to 12,000 units spread over 40 launches. Based on the estimated units, 20% are in the Core Central Region, 50% in the Rest of the Central Region and 30% in the Outside Central Region. Numerous significant project launches in the first quarter of 2023 ought to be favorably greeted by the market. These include The Reserve Residences, Blossoms by the Park, Jalan Tembusu, Lentor Hill Residences, Marina View, Newport Residences, Sceneca Residences, Terra Hill, The Botany at Dairy Farm, The Continuum, The Hill@OneNorth, and 8 Shenton Way.
Government Measures to Promote Stable and Sustainable Property Market
The government has also taken measures to promote a stable and sustainable property market, by removing property speculators from the real estate market in Singapore. On December 16, 2021, new measures were announced to cool the property market. Prohibitive stamp duty fees of 30% for foreigners buying property in Singapore don’t keep experts and overseas property investors out because many other countries that they would like to move to have banned foreigner buyers, such as Bali, Canada, Thailand, Australia (foreigners can only buy new launches) and New Zealand all blocked international buyers.
Foreign Demand for Singapore Property
Whether foreign investors will be affected by the stamp duty to look elsewhere also depends on many other factors, such as less restrictive jurisdictions for doing business, a stable and dynamic financial market, ease of travel, stable political government, and good economic fundamentals. Therefore, other than stamp duties for buying property in a country, foreigners also based their decisions on their objectives, country demographics, and market conditions.
Most importantly, compared to the rest of the world, Singapore is a rare country that is safe with a low crime rate (ladies can even walk alone on the street at 3 am), has good racial harmony, has a vast array of international food selections, and has a population that is mostly bilingual in both English language and Mandarin.
Impact of Lower TDSR and LTV for HDB Loans
The impact of a lower Total Debt Servicing Ratio (TDSR) and lower Loan-To-Value (LTV) for HDB loans on the market outlook for 2023 and on HDB buyers are yet to be seen. However, it is expected that the lower TDSR and LTV will make it easier for buyers to afford HDB flats, potentially driving up demand for these properties. This could also lead to an increase in the number of HDB upgraders, as more Singaporeans may be able to afford to upgrade to private properties.
Government’s Role in Lowering GLS Land Prices
When it comes to the government’s role in the property market, one of the key factors to consider is the pricing of Government Land Sales (GLS) sites. If the government chooses to lower GLS land prices in 2023, this could lead to lower prices for new homes and potentially make them more affordable for Singaporeans.
However, this decision will also depend on Singapore’s budget statistics for 2022. As the government spent an estimated $6 billion more than its received revenues, it may not have the financial flexibility to lower GLS land prices.
Overall, the property market outlook for 2023 in Singapore appears to be positive, with a return of foreign buyers and strong upgrading demand from Singaporeans expected. The easing of border measures and foreign talent returning to Singapore are expected to drive up demand for residential properties. Additionally, the supply of new homes is also expected to pick up in 2023, with an estimated 10,000 to 12,000 units to be launched. However, the government’s role in promoting a stable and sustainable property market through measures such as stamp duty and GLS land prices will also play a significant role in shaping the market in 2023.