Singapore Real Estate Forecast 2023

singapore real estate

The Singapore real estate market is considered to be among the most competitive markets in Asia. Both local and international investors think it is a good choice for an investment.

It isn’t easy for novice investors to get into the market. If you’re planning to invest within the real estate market, it’s vital to stay on top of their market conditions and trends.

1. High Demand

The market for Singapore real estate is still strong. This is in part due to the country’s stability in terms of economic and political stability, along with its attractive investment opportunities.

Despite the recent cooling measures and the soaring interest rates, there are still many potential buyers ready to invest in property. This is a good sign that the market will likely to remain stable in 2023.

In the event that demand continues to be strong, prices will continue to increase. But, should the economic situation or interest rates start to slow down, it could cause an increase in demand for housing. This could result in a decrease in prices.

2. Slower Growth

Singapore’s real estate market will decrease in the year 2023. This is due to rising rates of interest, the continuing influence of the property cooling policies and the dim macroeconomic outlook.

Singapore is a place that’s still popular for buying newly built homes as well as used ones. Nicholas Mak, ERA Realty’s Nicholas Mak, believes that the growing demand for homes from HDB upgraders as well as individuals looking to get out of the rising prices in Singapore will cause residential resales to the market to 2023.

Christine Sun explains how rising global interest rates have affected the home price. She also said that the economy of Singapore has been stable and employment growth is still strong, so most consumers aren’t strained and can service their mortgages despite the increasing interest rates.

3. There are Fewer New Products that are launched

Singaporeans might have a lower confidence in buying an apartment by 2023. But, the need for new launches is strong. For instance, in October the weekend-long launch of executive condominiums (EC) like Copen Grand or Lentor Modern witnessed a huge demand.

This is mainly due to the scarcity of housing units available on the market and demand from international workers who come to Singapore to find work, specifically in the case of newcomers.

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The market for property should keep growing despite small number of new developments as developers pass up increased costs for construction and land on to purchasers. Property prices should stay fairly stable throughout 2021-2022. However, at a slower pace.

4. Prices set to fall

Prices will decrease due to the slowdown in the economic growth, the cooling of policies as well as rising interest rates. Wong Xian Yang of Cushman and Wakefield’s head of Research Singapore forecasts that the an investment sales will stay strong up to 2023.

Christine Sun, OrangeTee’s Senior Vice President of Research and Analytics, expects prices to decrease in 2023 because of uncertain economic conditions and the cooling measures. The analyst expects HDB prices for resales to rise in the range of 5% to 8per cent, and private house prices are expected to increase with a lower rate of growth in the range of 5% and 7%.

Singapore landlords may continue to raise rents by 10-15%, to compensate for increased mortgage payments. It could boost profits, particularly if the economy is recovering with job growth and GDP increase are high.

5. High interest rates

If you are a home buyer in Singapore you need to be aware of rising interest rates. This will have an impact on your purchasing power and the cost of mortgage repayments.

Global economic conditions are to blame for the increase in the interest rates. Central banks throughout the world are increasing interest rates as a way to reduce the rate of high inflation.

As a result, the interest rate will rise and higher in Singapore in 2023. It will have an negative impact on the price of property.

The reason is that a higher mortgage rate will cause the discounted cash flow method of value calculation more difficult to apply. This could result in lower capital value and lower price.

6. High Depreciation

Depreciation is an important tax benefit of real estate investment that enables investors to lower their tax burden every year. Investors may choose to depreciate their property by straight lines or accelerate the process, based on its lifespan.

Recent tax code modifications include a bonus benefit of depreciation for the first year after the start of operations. This is especially useful for owners of rental property. This offers significant upfront tax savings. It allows investors to deduct huge capital expenditures in one go.

In addition to depreciation, owners are advised to look at cost segregation to cut away assets with a shorter lifespan from their properties. They can be especially beneficial in larger upgrades and renovations.

7. Lower Inventory

An absence of properties that are available is one aspect which has kept Singapore real estate prices strong over the years. The millennial generation, who had previously avoided homeownership and are now a growing group that is in high increasing demand.

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But, as the cost of homes continues to rise, it is very unlikely that the number of houses will be enough for the current demand. This could affect sales in 2023.

8. Transactions are reduced

Singapore’s market cooling measures include the Stamp Duty Additional for Buyers and Total Debt Service Ratio Rules and Total Debt Service Ratio Rules, both of which aim to stop homebuyers from going over their budgets. These rules could be modified based the market’s situations.

The prices of Singapore’s properties continue to increase despite these restrictions. The influx of overseas buyers and second home purchases of Singaporeans can be a major reason for this.

It is vital that the government does not stop to introduce cooling measures, such as the waiting period for foreigners and homebuyers who are required to pay the stamp duty. This is because the government has taken these measures to stop people who are buying homes from destabilizing the housing market through overextending their financial capabilities.

9. Stabilisation

Stabilisation measures are being implemented by the government in order to prevent prices from rising fast enough and prevent an imminent housing bubble. They can have a variety of advantages, such as low mortgage rates or increased access to credit.

The government’s goal is to keep Singapore’s real estate market stable and sustainable, especially after the 2008 property crash. It is the government’s goal to maintain and stabilize the market for real estate in Singapore, in particular after the 2008 property crisis.

The measures are beneficial to investors as well as buyers over the long run as they stabilize the market while keeping it affordable.

Knight Frank reports that international investors still view commercial property as “a solid class of asset” regardless of the uncertainty around the world. This is mostly due to the stable economy of the city and solid statecraft along with its tax-free rent earnings.

10. Slowing Growth

The real estate market in Singapore will fall in 2023 due increasing interest rates and inflation, as well an deteriorating macroeconomic climate and new cooling measures for the property market. Sales of investment properties are predicted to continue to be robust, though at a lower rate.

Therefore, the analysts anticipate that prices for residential homes will rise up to 5 per cent in 2023. This compares to a forecast of 9 per cent for full-year 2022.

Slowing growth is also predicted to affect the public housing sector. HDB Resales prices increased 2.1 per cent during the October-December period, easing from 2.6 percent during the third quarter, in accordance with estimates for flash by the Housing and Development Board (HDB).

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