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Will developers slash prices in 2023 or 2024, causing overall home prices to fall?


With so many new launches now, some analysts are claiming buyer’s fatigue & that consumers are spoilt for choice.


Singapore home prices are unlikely to fall over the long term because we have strong fundamental support for our home market from these 3 Key Indicators


1. Strong population growth


A growing population can support sustainable growth in the property market.

Singapore’s population is expected to grow to 6.9 million by 2030 (see below).



Total Population Forecast
Source: Population White Paper

white paper population
Source: MTI, ERA Research and Market Intelligence

With these statistics, we do not have sufficient homes to support our population growth.



As of Q4 2023, there are 4.8 million Singapore Citizens, PRs, EP and S Pass holders, and dependents of Citizens/PRs/Work Pass Holders.


Based on today’s proportion of S-pass, dependants and E-pass holders, 5.3 million and 5.6 million people will require a home based on the forecast of 6.5 million and 6.9 million respectively (see below).



Singapore Home Stats
Source: Singstats, ERA Research and Market Intelligence

  • 1.53 mil homes for 4.8 mil (1) population

  • Estimated household size at 3.1

  • If population hits the projected 6.9 mil or even 10 mil, up to 2.58 mil homes will be needed

  • Government will ensure the sustainable growth of our property prices.


Forecast of homes needed


home vs population stats
Source: Singstats, ERA Research and Market Intelligence

1. Population comprises Singapore Citizens, PRs, EP holders, S pass holders and dependents of Citizens/PRs/Work Pass Holders.


2. Total projected population


2. Resilient economic fundamentals

Strong Home Ownership: More than 90% of Singapore Residents (Singaporeans & PRs) are homeowners.


Majority of private homes are owned by Singaporeans & PRs (see below)



home ownership proportion
Source: URA, ERA Research and Market Intelligence

The government is ensuring the sustainable growth of property prices, and there is plenty of room to unwind their policies if necessary. For example:


  • SSD was revised down to 3 years holding period, from 4 years, wef 11 March 2017.

  • SSD was also reduced by 4 percentage points for each tier.


Holding period

SSD Between 14 Jan 2011 and 10 Mar 2017 (all inclusive)

SSD on and after 11 Mar 2017

Up to 1 year

16%

​12%

More than 1 year and up to 2 years

12%

8%

More than 2 years and up to 3 years

8%

4%

More than 3 years

​4%

​No SSD Payable

Source: IRAS, ERA Research and Market Intelligence


3. Good Governance

Good governance strengthens investor confidence because it reflects a strong and healthy legal system, thereby demonstrating political stability.


Resilient economic fundamentals also support home ownership (see below).


DP in chained (2015) dollars


Source: Singstat, ERA Research and Market Intelligence

Low unemployment rate


Source: Singstat, ERA Research and Market Intelligence

Rising foreign direct investment


Source: Singstat, ERA Research and Market Intelligence

Singapore is attractive to high-net-worth individuals (see below).


  • Singapore ranks 6th for luxury home sales in 2022: Knight Frank

  • Attractive to High-net-worth home buyers

  • Seen as a safe haven, with a stable political and economic environment

  • Government’s efforts in reining in runaway prices

Money laundering case busted! (see below).




Non-landed transactions ($5 mil and above)



Nationality by Residential Status

1Q 2023

​2Q 2023

3Q 2023

Company

112

5

3

Foreigner (NPR)

59

49

14

Singapore Permanent Residents (PR)

39

28

30

Singaporean

49

28

29

Source: BT, URA, ERA Research and Market Intelligence


Conclusion:


Why is it unlikely for developers to slash home prices, leading to a decline in overall home prices?


1. Strong fundamental support for home market - Population growth, strong home ownership and good governance provides confidence to investors.

2. Based on the population white paper, we currently have an undersupply to support the population growth.

3. More than 90% of Singapore Residents (Singaporeans and PRs) are home owners. The Government will strive to ensure sustainable growth in the long term. There is plenty of room to unwind their policies if necessary.

4. Resilient economic fundamentals such as economic growth, low unemployment rate, rising foreign direct investments and high personal saving rates support home ownership.

5. Singapore is attractive to high-net-worth-individuals and zero tolerance for money laundering.

6. Therefore, Singapore home prices are unlikely to fall over the long term.

7. Now is always the best time to enter the new launch market.


Disclaimer

This information is provided solely on a goodwill basis and does not relieve parties of their responsibility to verify the information from the relevant sources and/or seek appropriate advice from relevant professionals such as valuers, financial advisers, bankers and lawyers.

For avoidance of doubt, ERA Realty Network and its salespersons accept no responsibility for the accuracy, reliability and/or completeness of the information provided. Copyright in this publication is owned by ERA and this publication may not be reproduced or transmitted in any form or by any means, in whole or in part, without prior written approval.


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