SINGAPORE: Property analysts expect property prices to continue climbing next year, but a strong supply of new homes may help moderate the anticipated spike.
For new private homes, the jump could be as high as 12 per cent according to one estimate, but others expect a rise of between 5 and 8 per cent. The projected rise for resale Housing Board flats is 5 to 11 per cent, according to analysts.
Huttons estimates that the supply of new private homes will pick up in 2023 to an estimated 10,000 to 12,000 units spread over 40 launches. This compares with 4,500 to 5,000 units in 2022 and 10,496 units launched for sale in 2021, according to Huttons.
In addition, a bumper crop of more than 20,000 landed, non-landed, and executive condos may be completed, which could help stabilise prices, according to OrangeTee’s Market Outlook.
With more launches, OrangeTee estimates that new private home prices may rise by 5 to 8 per cent next year, which is slower than the hike of 10 to 11 per cent expected in 2022.
Analysts at PropNex are more cautious, and think that the growth in private home prices in 2023 is expected to moderate, rising at a slower pace of 5 per cent to 6 per cent, due to global headwinds and high interest rates.
But ERA Realty’s head of research & consultancy Nicholas Mak foresees the increase to be greater and hit up to 12 per cent year on year, pushed up in part by rising development costs..
“The rising development costs will dissuade developers from lowering the prices of their new residential launches,” said Mr Mak.
Due to a record low number of unsold homes in the market and rising costs, some developers will test new benchmark prices by launching their new projects at higher prices than nearby projects launched earlier, he said.
None of the analysts who replied to CNA’s queries expect a price correction in the private resale market in 2023 for several reasons.
Ms Christine Sun, senior vice president of research & analytics at OrangeTee said that strong employment sustains sellers’ pricing power and they will not lower prices too much.
And while economic growth is predicted to slow, official estimates indicate that the possibility of a severe recession is low, while the labour market remains tight, said Mr Mak.
“We see HDB upgraders and those escaping rising rents, such as new permanent residents, to be one of the main demand drivers for resale properties in 2023,” he added.
Huttons’ Mr Lee Sze Teck feels that prices are unlikely to soften as speculative demand is low and buyers have the ability to meet bigger mortgage payments from higher interest rates.
The rising interest rates, however, could dampen the interest of some buyers.
“As the era of low-interest rates may not return anytime soon, most buyers will likely be prudent in their home purchases,” said Ms Sun.
Mr Mak thinks that while property investment will taper, demand from owner-occupiers is expected to remain stable due to the desire to own one’s own home and to avoid rising rents.
He thinks that HDB resale prices will also continue to rise but at a slower pace partly due to property cooling measures, and because of an increase in the supply of new Built-To-Order flats next year.
In September, the Ministry of National Development imposed a 15-month wait-out period on condominium downgraders wanting to buy resale HDB flats.
The HDB resale price index could “moderately expand” by up to 10 per cent, he said.
Huttons’ Mr Lee is more conservative in his projection, forecasting that resale flat prices will see not more than a 5 per cent increase.
He also thinks the number of million-dollar flat transactions should reduce as cooling measures curtail demand. In the first 11 months of 2022, more than 340 HDB flats were resold for at least S$1 million – surpassing the record 259 deals done in the whole of 2021.
He said: "HDB will launch more than 8,000 BTO flats for sale in 1H 2023. Some of these flats may have shorter waiting time and may attract some buyers away from the resale market."
PropNex forecasts that HDB resale prices may grow by 6 per cent to 8 per cent in 2023. This is lower than the 9 to 10 per cent growth it projects for 2022, and the 12.7 per cent increase in 2021.
"Together with the cooling measures and some price resistance setting in, this may slow the pace of the overall price increase," its analysts said in a market outlook.
Rents are expected to rise as well. Mr Mak sees an increase of more than 12 per cent for private housing rents in 2023, which is slower than 2022’s 25 to 30 per cent growth.
Oncoming new completions in 2023 will add to rental supply and could help to rein in rental growth, said PropNex.