Methods to Beat ABSD and Own Multiple Properties in 2024 (Updated)
TLDR Navigating the Additional Buyers Stamp Duty (ABSD) in Singapore can be daunting for property investors. To save on ABSD...
Read More
TLDR
The real estate market in Singapore is experiencing shifts in housing supply and demand, influenced by factors like mortgage rates and construction trends. Anticipated reductions in mortgage rates may ease financial burdens for potential homeowners, while fluctuations in HDB construction and property launches impact market dynamics. Additionally, the introduction of Plus model housing is expected to drive up resale flat prices in select areas. Private housing supply is gradually easing, with new launches offering fresh units to the market. Despite challenges in price ceilings for mass-market new launches, developers are striving to meet market demands. When considering property transactions, it’s essential to assess individual circumstances and seek expert advice to navigate the evolving real estate landscape effectively.
In the current media landscape, there’s a perceptible trend of messages circulating that suggest a reduction in prices and an increase in supply. This pattern seems to hint towards a major, impending event attempting to placate the public. However, we can confidently say that new homeowners are welcoming any sliver of respite. The period following the Covid outbreak has been particularly challenging for this already under-pressure group.
Will Rising Mortgage Rates Put a Cap on Housing Prices?
In a recent news piece, MND shared that mortgage rates might hover between 3.7 and 4.4 percent, potentially suppressing the surge in property values. This is a perspective we subscribe to, having previously discussed the significant impact seemingly minor hikes in mortgage rates can have.
On another note, it’s worth considering the possibility of Federal Reserve rate reductions in 2024. The US Federal Reserve, known as the Fed, typically reduces interest rates when economic prospects seem bleak. This action subsequently impacts Singapore’s interest rates as well.
The issue is that the Fed’s strategy for 2024 remains somewhat ambiguous. On one hand, there are expectations of rate cuts due to slowing growth. Recently, however, there have been increasing debates regarding the depth of these rate cuts. In any event, there exists a chance that mortgage rates may decline over the next year, potentially easing the financial burden for potential homeowners.
Speaking candidly, if the powers that be desired to rein in prices, they could simply hike up the base rate used to compute the Total Debt Servicing Ratio (TDSR), currently standing at four per cent. This move would be justifiable, given the noticeable increase in real interest rates.
(The TDSR restricts your home loan repayment amount, along with any other outstanding loans, to a maximum of 55 percent of your monthly income).
Regardless, investors are likely to be the most deterred, given that higher rates eat into profits. Conversely, genuine homeowners usually view home loan interest rates as a necessary burden. Unless they’re prepared to relinquish private property ownership and opt for an HDB flat, provided they qualify for an HDB loan.
The End of the Housing Supply Drought: What’s Next?
It appears the hustle and bustle of HDB construction is beginning to cool off. Take this year as an example, we’ve seen only three HDB launches compared to the usual four. This shift in gears is likely a reaction to a decrease in application rates from first-time buyers.
Interestingly, this reduction in launches was spun as a positive for potential buyers. The Housing Development Board (HDB) suggested that applicants now have a “higher chance of success in finding a flat that meets their budget and needs.” But despite a higher supply of flats per launch, the overall annual number has dipped.
Moreover, most industry observers anticipated a slowdown in HDB construction this year. After all, there was a production surge in 2022 and 2023, with output increasing by 35 per cent over the two-year period. If this trend continued unabated, we could be looking at a flood of HDB supply like we saw in the 1990s. While this scenario might appeal to first-time buyers, the wider market probably prefers to maintain the status quo.
Anticipating Surge in Resale Flat Prices in Select Areas for 2024
Anticipated to launch in 2024, Plus model housing is set to make a splash in the real estate market. Much like the effect observed with Prime flats, resale properties near these Plus and Prime regions could experience an uptick in value, particularly those unburdened by any drawbacks associated with Plus and Prime locations. As one property agent put it, “It’s hard to imagine anyone looking at a Prime or Plus apartment from their own window and not considering a price hike.”
Looking back to 2022, some property sellers were subjected to a 15-month waiting period, and the conclusion of this hiatus may trigger a rise in prices in sought-after areas like Queenstown, Bishan, and Tanjong Pagar. The reason being, sellers of private properties often find themselves in a financially comfortable position and can afford to demand higher Cash Over Valuation (COV) for the most coveted HDB locales.
A quick note on the 15-month waiting period – it was initially implemented on 30th September 2022 and required private property sellers to wait 15 months before purchasing a resale flat.
In terms of private housing, we’re witnessing the easing of the supply bottleneck. The year ahead promises about 38 new launches, introducing over 11,600 fresh units into the market. Furthermore, the recent completion of sizeable projects, such as Treasure at Tampines (boasting over 2,200 units and holding the title of Singapore’s largest condo development), could potentially ease the rental market.
However, predicting a significant decrease in private home prices might be a stretch. Developers are caught in a tight spot with margins, and breaking through the current price ceiling of approximately $2,100+ psf for mass-market new launches could prove challenging.
Should You Buy, Sell or Wait?
If you’re reading this, you must be trying to figure out the best course of action right now: is it the right time to buy or sell?
It’s difficult to give an exact answer since everyone’s situation is unique and what works for one person may not necessarily work for you.
I can bring you a wealth of on-the-ground experience and a data-driven approach to provide clarity and direction. From beginners to experienced investors, our top-down, objective approach will help you on your real estate journey.
I can help you by:
- Offering Strategic Real Estate Advice – I can help create a comprehensive plan to guide you through your property journey.
- Connecting Your Home with the Perfect Buyers – Through stunning visuals, an effective communication strategy, and an in-depth knowledge of the market, we’ll ensure your home is presented in the best possible way to fulfill your goals.
You May Also Like …
When a Property Seller Pulls Out of the Deal : What Now?
TLDR When a property deal is not yet formalized, sellers can withdraw without consequences. However, once an Option to Purchase...
Read More
5 Reasons : Why Singapore’s Rental Market Is Still Lucrative For Property Investors
Singapore's property market has always been an attractive investment option due to its stability and potential for high returns. While...
Read More
5 Things to Know About Singapore’s Urban Redevelopment and Landscape Changes
As one of the world's most densely populated cities, Singapore has undergone significant urban redevelopment over the past few decades...
Read More
5 Smart Techniques That Resourceful Homebuyers Utilize to Overcome Restrictions on Home Loans
TLDR When it comes to navigating the complex world of home loans and property acquisition, it's crucial to be aware...
Read More
Breaking Through the Stalemate of En Bloc Sales
TLDR The Singapore property market faces challenges with the ongoing en bloc stalemate. Lower success rates, higher development risks, and...
Read More
Singapore’s Priciest Districts Are Shifting—4 Key Buyer Trends Driving the Change in 2026
TLDR The Core Central Region (CCR) property market in Singapore is shifting from luxury trophy assets to practical, lifestyle-driven homes....
Read More
The Impact of a Real Estate Agent on Your Property’s Selling Price
TLDR In the world of real estate, the value of property agents lies in their ability to create competition among...
Read More
I Purchased My First Property in My Mid-20s: Avoid These Common Mistakes!
TLDR When it comes to property ownership, Charles learned valuable lessons through his journey as a youthful homeowner. From opting...
Read More
Top 5 Tips: Gain an Edge in the Singapore Property Market: Steps to Boost Your Investment Returns
The Singapore property market has always been a hotbed for investors looking to make substantial returns on their investments. As...
Read More
Top 5 Hawker Centres in Singapore for Local Food
Singapore, a melting pot of diverse cultures and rich culinary heritage, is home to some of the most delectable local...
Read More
Should You Be Upgrading To A Condo In 2023?
TLDR The 2022/23 property market is experiencing high prices, making it challenging for individuals to decide whether to upgrade their...
Read More
Top 5 : What I Wish I Had Known about Property
The world of real estate is a complex and dynamic field, filled with opportunities and challenges. It's a realm where...
Read More
Are Cluster Landed Homes Still a Good Investment? Analyzing Their Performance Over the Past Decade
TLDR When it comes to cluster housing, freehold properties like Bishopsgate Residences command top prices, whereas bargains can be found...
Read More
Will Property Owners Earn More By Keeping Residential Properties For An Extended Period?
TLDR In Singapore, holding a residential property longer typically yields higher profits—averaging $665,000 after 20 years, versus $200,000 for 5–10...
Read More
Identifying a Good Investment Property: A Guide
TLDR When it comes to navigating the real estate market in Singapore, understanding key factors can make a significant difference...
Read More
Rising Interest Rates : A Cause for Concern?
TLDR In 2021, the real estate market saw a surge in demand due to low interest rates and supply chain...
Read More
When Should You Consider a Shorter/Longer Home Tenure?
TLDR Understanding the benefits of long-term home loans is crucial for financially conservative individuals in Singapore. Opting for a longer...
Read More
Top 5 Boutique Shopping Streets in Singapore
Singapore, a cosmopolitan city-state known for its vibrant culture and diverse shopping scene, offers a unique blend of modern malls...
Read More
“I Kept My Condo Empty for 7 Years” – Here’s What Singaporeans Living Overseas Do With Their Properties Back Home
TLDR In today's global workforce, many Singaporeans find themselves working abroad, raising questions about the management of their local properties....
Read More
