Guarded optimism for Singapore’s private home sales market

Resilient growth

The Singapore private home sales market has demonstrated remarkable resilience in 2023, overcoming a multitude of challenges. Overall private home prices trended higher for the seventh consecutive year, growing by 6.8% compared to the previous year. While price growth moderated from 2022, the sustained uptrend in prices indicated strong underlying demand and financial well-being of buyers, as well as optimism about the housing market’s long-term prospects.

Challenges and underlying strengths in 2023

The market cooling measures implemented on 27 April 2023, which raised the Additional Buyer's Stamp Duty (ABSD) rates for investors and foreign buyers, stifled demand from these groups. The interplay of high property prices, elevated mortgage rates, inflation, a downcast economic outlook and geopolitical tensions also compounded market challenges, further amplifying buyer caution.

As a result, total private home sales declined 12.5% year-on-year in 2023. The punitive 60% ABSD deterred non-permanent resident (NPR) foreign buyers. The proportion of private home purchases by NPR foreign buyers fell to 3.3% in 2023 from 4.3% in 2022. It is even lower than the 3.7% recorded in 2020 and 3.4% in 2021 when Singapore’s borders were closed to foreign visitors during the height of the COVID-19 pandemic.

Conversely, Singaporean buyers and Singapore permanent residents (PRs) continued to account for the majority of home sales in 2023. Sales to Singaporean buyers rose from 79.1% in 2022 to 80.3% in 2023. The share of home purchases by Singapore PRs was also resilient, remaining stable at 16% in 2023. This trend underscores the underlying strength of demand from local buyers and public flat upgraders buying for their own occupancy.

Notwithstanding more challenging market conditions, the combination of buyers' aspirations, ample market liquidity and healthy household balance sheets has played a role in driving sales and supporting price levels, whenever attractive and compelling projects are introduced.

Outlook for 2024

A guarded optimism prevails for 2024, with expectations of a fairly resilient private home sales market.

Buyer caution and selectivity will persist into H1 2024 due to economic uncertainties, high interest rates, inflation, lofty prices and increased available options. Developers are, hence, likely to adopt more sensitive pricing strategies, but significant price corrections are not expected, and the prices of new projects should hold up given the high land and development costs already invested.

The favourable mix of low unemployment, ample market liquidity, and anticipated improvements in the economic and interest rate environment in H2 2024, combined with a potential robust launch pipeline of more than 12,000 new units for the year, are expected to bolster buyers' confidence and stimulate demand. Past trends also suggest that market slowdowns can swiftly rebound, leading to a resurgence in home sales and price growth when the external environment improves.

Local buyers purchasing for owner-occupancy are projected to drive sales, even if foreign buyers and investors remain deterred by the hefty ABSD. On balance, a more sustainable price growth of 3–5% is projected for 2024.

Table 1: Examples of potential private residential project launches in 2024

Notes:

CCR – Core Central Region; RCR – Rest of Central Region; OCR – Outside Central Region.
GLS – Government Land Sales
*     Watten House was previewed on 18 November 2023. The official launch is scheduled in 2024.
**   The Arcady @ Boon Keng and Hillhaven were launched in January 2024.
Actual project launches are subject to change, depending on developers' plans.

Source: JLL Research