Property Market Outlook 2023
Property Market Outlook 2023
What’s happening in the market and how you can move forward with your property investment planning.
Property Market Outlook
In 2022, Lentor Modern, Copen Grand all of the project are more than or at least 70% to 80% sold (i.e. Copen Grand EC, AMO Residence, Lentor Modern).
At OCR, we are hitting the new Benchmark pricing. Look at the highest per square foot (psf) or even the average, hitting at least 2100psf for OCR project i.e. Sky Eden, Lentor Modern as well as AMO Residence.
Sceneca Residences, the latest new launch, also sold at least 60%. So as of now, mainly in 1 and 2-bedroom highest psf we achieved is 2219 psf. This project is also falls under OCR.
Facing the same issue interest rate very high dry weight uh whatever your crash recession
There were increasing of construction and material costs, estimated around 30%. All these factors are important to explain why prices won’t come down, why prices won’t drop, in fact it will continue to increase but maybe at a slower growth but there won’t be any decrease.
Next, these are the factors affecting the price growth, first is higher land cost, higher construction cost, lastly higher financing costs.
As we know the interest rate right now we are hitting maybe close to 4.5%, 4.75%, 5%.
In 2022 private home prices were up to by 8.6%.
In 2023, China reopening of economy. A lot of China buyers or China tenants or even Hong Kong tenants, we are expecting more of them coming in. Recently for the past one or two weeks a lot of the big quantum projects in the CCR has been transacting, Riviere, Leedon Green, Pullman Residences.
Monthly visitor arrival to double.
Population growth Drive the prices up. In 2030 we are going to hit about 6.5 million to 6.9 million residents in terms of population. So more people definitely will require more housing needs, which means the demand will still be there, will be more sustainable in the long run as well. We are on track to grow 19% till 2030 to 6.5 million (population).
In 2023, Singapore introduced One Pass i.e. the monthly salary to qualify for this One Pass is $30,000. How long will it be for? For 5 years.
That’s why the rental even though now 3-bedroom easily for The Tre Ver 3-bedroom is asking for about $7,000 $8,000, 2-bedroom for $4,500 $5,000 there are still takers. Easily 4% (rental yield).
Yesterday I just spoke to my China tenant, they say that in Shanghai, Beijing, they are getting is only 1% or 2% rental yield. That’s why they want they rather put their money in Singapore, buy a unit for investment, right now easily can get 4% to 5% percent rental yield. That’s how they are looking at our Singapore property market right now.
Rental historical high up, by 14.7%
New home unsold supply, we are hitting 5 years low, which also explain why nowadays, it’s either no units, showflat closed, all low floor, unit not good. Even though those with budget you still cannot find anything for them because there’s really very low supply.
Why is it so because there’s a very strong demand and take up rate ever since in 2019-2021, as well as 2022.
Pent-up demand, 8 years average (post TDSR cooling measure implemented), this is all the statistics the data to show 2022 has the lowest launch supply in the last 10 years.
There’s something to take note, I also have been talking to my friends and all, I realized that a lot of them have this intention not just to have one property, in fact to have at least two properties. If you have been talking to your friends or clients you might realize actually quite a number of them own at least two properties. Many will say, in one household, husband own one, wife own one, and most of them they are trying to move into the condo, the private home sector.
Why is it so? All thanks to us, we have been doing Asset Progression for the past 4 or 5 years, always keep telling them, BTO MOP-ed, best time to sell, best time to catch up to move to condo. This data shows more and more people are moving towards the private homes sector.
The cooling measure in 30th September 2022, targeting mainly the private home owners, about the 15-month wait out period. They cannot buy any HDB resale flats, non-subsidized, so this might also turn them into OCR for private market, for the resale condo.
Why price keep increasing? Your clients or your friends are actually their income increased but they always tell you they no money, they cannot buy this, but every time they can go and eat good food, go cafe or even go holiday, fly to Europe, is because their income also increased. So that’s why the income to property ratio still holds at a very comfortable range, compared to other country,
Strong affordability from HDB Upgraders.
Interest rate. This is from UOB. So based on UOB forecasts, up to now it’s quite accurate. After around 2023, the interest rate will taper down. High interest rate cannot sustain for so long also, if too long will lead to recession. The US are also looking into this very carefully. The last thing that they want to do is crash the market or the whole economy go into recession.
New launch. Example if today someone wants to buy a new launch and someone wants to buy a resale a lot of people want to compare resale and new launch which in the first place is not really apple to apple comparison but clients they always like do this, but you can show them our Sales + app that the interest saved, compare with resale vs new launch, is very significant, because you can tap on the Progressive Payment Scheme, for new launch.
Covid pandemic sends Singapore’s economy to its worst ever recession in 2020. The worst GDP contraction in history was at -5.8 in 2020, which means the worst has been over right? Now it’s already 2023.
Slower growth in 2023, but that doesn’t mean there’s no growth, it’s just that the increment will be lesser, not so volatile, not so vibrant but that means there’s still growth.
Property prices grew even higher during pandemic.
There’s a period during Covid people like to invest in Bitcoin NFT. those are very volatile but too many negative news coming out, people already started shifting their money to a bit more stable assets, like property so give them a sense of security, also prudent use of their credit with cooling measures provide support for long-term growth.
Inflation is about 5.5% to 6.5%. So one very important factor about real estate – real property, the physical one, is that we are hedge against inflation.
Singapore property market expected to remain resilient in 2023. Why? Increase in population, low residential supplies, as well as income growth.
What’s upcoming were The Botany at Dairy Farm, Lentor Hill Residences, all these are OCR, are going to launch average $2100 psf.
If still thinking that $2000 psf is expensive, please don’t think that way anymore because 10 years later on, in 2033, you will tell me or you will share with your clients that last time $2000 psf is cheap. It’s always the same thing happening, we are repeating the same pattern.
$2000 psf right now is cheap. For resale if you look at the psf it’s also slowly catching up, the quantum that your resale is asking is probably very very close to a new launch, if you do a comparison for any project.
$2000 psf is the new cheap. Anything below $2,000 if you can find in your ERA Pro, please go and grab because you’ll never find discount pricing again.
Do contact me if you want to have a more in-depth discussion and I hope to have a chance to work with you. See you. =)
If you wish to learn more about Singapore’s Property Market, do follow me, Ryan from Buyhomenothouse, to get more tips and updates!