Earlier today, our very own Host & Producer, Audrey Siek was invited to MoneyFM 89.3 to share Ohmyhome’s thoughts on the future of the housing market in Singapore for 2023.
Here’s the embedded 16-minute audio for you to check out.
If you’d like to follow along and read the text, here’s what Audrey and interviewer Hongbin Jeong discussed:
1. Hongbin: We’re entering the second week of the new year – How would you describe the property market at the moment?
Audrey: Well, first off, Happy New Year.
One word, many words…
Crazy, insane, red hot, unprecedented — Or at least it has been crazy.
Let’s just do a quick recap before I go back to your question: the market was incredibly robust last year, to say the least.
And I’m sure your listeners, are aware of the property curbs that were implemented to cool the market.
Let’s take a look at one particular number to illustrate this. In 2022, we’ve seen a record number of million-dollar HDB flats being sold.
I know you ask the questions around here, but I have to ask you, what is your guess, what do you think that number is?
Hongbin: I mean if you didn’t say a record number, I would have probably guessed 1. I don’t know couple hundred, three hundred?
Audrey: That’s actually a pretty good guess, actually, it was over 1 a day. Yeah it was 370 flats that switched hands for at least a million dollars in 2022.
And I don’t know about you but I remember a time where million-dollar flats were kind of special right, but now, it’s literally a daily occurrence and it’s happening across Singapore.
It’s not so much the Pinnacle @ Duxton anymore, or just in that region, it’s everywhere.
So bearing this in mind, I would say that right now, we’re riding a pretty high wave, and it will take some time for some stuff to cool down.
Going back to those the cooling measures that were implemented, it hasn’t been very long, it kickstarted September 2022, so it’s been a few months.
We’ve observed some growth in prices – but it is slowing. So we believe we can expect to see some stabilization and moderation of prices in 2023.
2. Hongbin: With growing economic headwinds, two rounds of property curbs and the absence of major new launches, growth in private home prices cool to 0.2 per cent in the fourth quarter of last year – and that’s the slowest quarterly growth since the first quarter of 2020. Des that mean we can expect prices to continuously go down?
Audrey: Short answer is… it’s hard to say.
You’re right to say that growth has slowed, to 0.2 percent in Q4 but like you said, we saw a slowdown in the growth of prices. But there’s still been growth nonetheless.
So our Ohmyhome agents and many analysts have said that they expect prices to “moderate” further on the back of these cooling measures, but when they “moderate” we don’t mean plummeting prices.
If you read the straits times, business times, prices are expected to rise around maybe 5 percent for the whole of 2023.
So it just means that the GROWTH in prices is expected to slow in comparison to what we’ve seen in the past year.
Overall, it’s a safe bet to say that the market will remain robust in 2023.
3. Hongbin: For current homeowners looking to sell their house – Is this a prime time to sell their property right now?
Audrey: Overall, we believe so. Ohmyhome actually just published an article all about this, but to summarize:
Like I mentioned about us riding a really high wave, the market is still hot, and it will take time for us to see any notable slowdown, or to see the real effect of these cooling measures.
While we don’t know how long this will take, how long it would last, our advice is simple: if you need or want to sell your home and you haven’t already, you should strike while the iron is hot and you should do it now.
You need to validate the demand, look at the market trends, and transactions in your area to get the best possible sale, and of course drop us a message and speak to our agents who can help determine if it’s the best time for you specifically.
But generally we believe we’re riding a high wave and you really should take this opportunity.
4. Hongbin: I mean it is good news for people who are looking to sell their house, they can sell at such a high price, but when it comes to selling a house – most are also looking to buy a new one. Is there still a buying opportunity, with prices still so high?
Audrey: Yeah, that’s a great question.
I think there’s always a buying opportunity. The key here is that it depends on the intent.
Why are you buying? Why are you selling? What do you want out of this.
- If you’re selling because you have to be – you need to look for a more suitable home for you and your family – and that’s why you need to buy, then it doesn’t matter that much what the prices are. This is the typical life cycle of a property journey – you’re selling to buy a new one to live in that works for you.
- The priority goes to finding the right home for your situation, and not so much about walking away with cash proceeds.
- But if you’re looking to sell to make a profit, unless you are moving to a less central, smaller home, you will be selling high, but you’re also, in turn, buying high based on how the market is right now. So chances of you walking away with a lot of cash, if you’re envisioning that, we can’t say for certain.
- But what you will need will be proper financial calculations to help you determine what you’ll be making and how you can maximise these profits and of course we can help.
- And very quickly for those investors, if you’re not looking to sell at all and you just want to buy a a second property or to invest, we believe there is buying opportunity especially in the areas surrounding new launch condos, with the recent rise in new launch condo prices in terms of psf, we believe there are some properties around that area that can still achieve some appreciation.
5. Hongbin: So let’s look at HDBs more specifically now with the dwindling supply of homes entering the resale market after the minimum occupation period this year – are resale prices for HDB flats set to rise this year?
Audrey: So many factors go into the reason why prices go up and down. It’s a multi-faceted situation, so many forces actually affect the rise of housing prices, so if we are talking specifically about supply of homes meeting MOP going down, and whether that alone would drive prices, it’s hard to say, but we believe people will still have options apart from resale HDB flats.
HDB has recognised actually in the past that reduced supply and long construction waiting times, are the 2 driving factors when it comes to rising HDB resale prices, but we can look forward to additional BTOs planned for this year, as well as a number of new launch properties coming as well.
So supply is coming from elsewhere.
6. Hongbin: For those renting flats – will the new year bring any relief?
Audrey: First of all, shoutout to the all the renters out there, I myself am a renter, and I’ve had a very hard time the last year. Hongbin do you rent? Yes, so of course we come to this question and I think this is the number one question that I usually get since working for Ohmyhome.
Well I got some bad news, guys: it doesn’t seem likely it’s gonna get better.
We expect the rental market to continue staying hot.
So many factors contribute to rising rental prices.
- With borders now open, COVID has eased up finally but that means more expats are coming back to Singapore to live and work. They’ve gotta rent.
- The cooling measure for private home owners who now have to wait 15 months after selling their private home to buy an HDB resale. For 15 months, they have to stay somewhere probably a 2-year lease, so they’re renting as well. That’s another pool.
- And because of the changes to the LTV limits for HDB loans, as well as the rising interest rate floor, we also predict more young Singaporeans are going to start renting so with all of these people now also in the market for a rental unit, here’s the hoping that goes better for us renters than we predict. May the odds be ever in our favour.
7. Hongbin: Property is crashing everywhere, except in Singapore. Private residential prices are up 14% year-on-year. That’s a sharp contrast to major cities like Hong Kong and Sydney, which saw decreases of 7% and 4% respectively over the same period. How has Singapore’s property market remained so resilient?
Audrey: You know this is a great question and we actually covered this yesterday in our property recap and I had to speak to our agents to find out why because it really is remarkable, and after speaking to them and getting some insight, it is really hard to pinpoint why, but I do have a few things that we can consider.
A big difference between Singapore and these cities you mentioned, is that we have a huge public housing component, and we have CPF – which has an entity entirely for housing needs. Our citizens have access to special financial schemes, government grants to help you buy a home, keep it affordable.
And that is largely why almost 90% of Singaporeans own their homes. The cities you’ve mentioned – they don’t provide nearly as much assistance, financially or otherwise, and they do not have the ownership rates we do, because Singapore, in truth, wants its citizens to be able to or have the option to own their homes.
So bearing this in mind, because there’s a culture around owning, but also we have some concrete institutional help to do so, I think that’s a big reason why the average citizen here is able to have the ability to go with the highs and lows of the market, and buy/sell when they need to.
Also, ballpark 80% of our population live in HDB flats and many of them take up a HDB Loan. Now these loans aren’t as affected with rising interest rates. It hasn’t changed for years.
For the private sector, I’m sure this will be going on for awhile but for a long time, Singapore has been a safe haven for foreigners turned PR with deep pockets, I’m sure you can name at least a few people that made it on to our shores and on our headlines, with the luxury properties that they’ve been able to get.
We’re talking about famous business tycoons, well to do expats, these people have seen Singapore as a safe bet to invest in property, so I think that for these reasons, Singapore’s property market continues to show signs of incredible resilience and growth.
8. Hongbin: Fears of a global recession to come in 2023 are growing. So if that happens, will Singapore’s property market be able to withstand this as well?
Audrey: We believe so, as compared to other developed countries and major cities, we are in a better position to deal with a global recession.
To my point before with the high ownership rates, and Singaporeans being able to use CPF to finance their properties, this really gives Singaporeans and our property market some cushion.
But a global recession – its in the name, affects the global economy as a whole.
So looking at the 2008 housing crisis in the US, we did experience some impact with that despite the crisis being a largely domestic issue.
And with the Asian financial crisis in 97′, that hit much closer to home and we’re actually affected by that as well, but all in all, should a recession come soon, we will be be affected but likely still be better off than most or a lot of developed countries who do not have a similar housing structure in place.
9. Hongbin: Do you have any advice for those looking to invest in their first home?
Audrey: First off, you don’t have to do it alone, that’s a key takeaway.
Knowledge is power. It’s important to know key facts going into a big purchase. For many people, home ownership is one of the biggest, if not THE biggest purchase that they make in their lifetime.
From market trends, previous transaction prices, but also fully understanding what you need. You need to go in with your eyes wide open
May I suggest you follow Ohmyhome’s social media, we provide tips, weekly news recaps, to navigate all of this. We also recommend getting an agent to help you – I’ve heard from friends and family that having someone by your side, on your side who comes with all the knowledge is a real time saver.
If you want to do it yourself, give yourself the time to get smart on it.
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