It’s coming to the end of 2022 and while most of your colleagues are on holiday, the property market doesn’t go on vacation.
A lot has happened in 2022, both reacting to cooling measures that occurred at the end of 2021 and seeing its own set of cooling measures at the end of September; there’s bound to be even more to look forward to in 2023.
So here we explore 4 potential property impacts, specifically for the HDB resale market, to keep tabs on in the coming year.
4 HDB resale market impacts in 2023
1. Increased demand for 4-room flats
While it is not uncommon to see million-dollar HDB transactions exchanging hands in today’s market, many of them are made up of the larger 5-room and Executive units that are no longer built today. These massive homes (in today’s standard) make up the bulk of the 7-figure price tags. It’s still rare to see 4-room homes selling for such high prices, but this can soon change.
While we expect market prices to stabilise, that doesn’t mean prices will drop. And when buyers are priced out of the top range 5-room properties, they will naturally look for the next best thing: A smaller unit in the same block or development.
And while the cooling measures affected affordability by reducing the amount buyers can borrow and increasing the amount of downpayment required, the impact hasn’t been too severe. On average we can see buyers having to reduce their budget by about $20-100,000, which is usually the difference in price between a 5-room and 4-room flat.
So, if there was once a possibility to purchase a 5-room flat, there’s still a definite possibility to buy a smaller 4-room flat in the same area even with the reduction in resources. And sellers won’t be quick to drop their asking price especially when they see a new pool of buyers opening.
2. Reduced demand for 5-room, jumbo, and executive units in central regions
This group of homes have been the most affected this year, and will continue to stay affected for all of 2023, due to the 15-month waiting period introduced as part of the September 2022 cooling measures.
In fact, if a private property owner sold their place exactly on the 1st of October this year, one day after the cooling measures were implemented, the end of their 15-month wait-out period would end only at the start of 2024.
This would mean exactly none of the affected private property sellers can purchase a HDB flat next year. Zilch.
And while it is still possible for HDB owners who are looking to move into a bigger space to be potential buyers of such units, the cash surplus that came with selling a private property just made it more likely to finance the 1.X million homes in the central regions of Singapore.
3. Moving out from central regions to less central regions
Alternatively, a buyer who once had the budget to purchase a large central unit, who still prioritises size over location, could still have the option to purchase large units in less central areas.
With a decent supply of those units, especially in the north of Singapore, we can expect many to be tempted to save a few hundreds of thousands by sacrificing some travel time to the office.
So there’s an expectation of even more of the highly sought-after homes residing in the corners of the map to be sold to these buyers. In fact, this could turn into a general trend affecting central units of all sizes.
With interest rates not looking like it may fall anytime soon, the yearning to save every dollar may force buyers to look elsewhere.
4. Blurring of lines between central and non-central areas
That brings us to the last of these points and one that may make the biggest impact.
Virtually in every housing situation in every country in the world, there’s always a distinction between living near the city centre versus the outskirts. And while that is still true in Singapore, the distinction may be thinning, the line blurring, and the gap narrowing.
This could partially be attributed to the decentralisation of Singapore’s amenities. Step out of Jurong East and the huge malls of JEM and Westgate can rival what’s on offer on Orchard Road.
Connectivity attributed to the Downtown Line and now Thomson East Coast Line has helped reduce the amount of time it takes to get from the corners of the map to the Central Business District.
Lastly, this would, of course, naturally be due to the ageing of the more central HDBs built quite a while ago, as their lease decay may continue to impact their asking prices.
So while we’re not exactly there yet, 2023 may surprise many when we see the price of 2 similar-sized HDBs in Punggol and Pasir Ris match the price of a HDB in Tiong Bahru and Bugis.
Both buyers and sellers will have plenty of questions entering 2023 and while no one can predict the future and provide answers to these questions, we may be able to help to provide insight and advice to anyone looking to continue their property journey in Singapore.
Our Buyer and Seller Agent Services have helped plenty of Singaporeans achieve confidence with their decision to both buy and sell their next property and with turbulent times ahead, today may be the best time to get a head start on your 2023 New Year’s Resolutions.
Contact us today via WhatsApp or our Live Chat below, and let us help you start 2023 on the right foot. Ohmyhome, always by your side, always on your side.