As we approach the end of 2024, is Singapore’s property market quietly celebrating? Why are Singaporeans still rushing to buy homes despite such high prices? In case you haven’t heard, we must tell you: a new launch frenzy is sweeping across the Lion City.
Emerald of Katong on Singapore’s East Coast sold 99% of its units on its launch weekend, Nava Grove, a private residential project in Pine Grove, sold 65%, the luxury executive condominium Novo Place sold 57% at an average price of S$1,654 per square foot, and Chuan Park in Lorong Chuan sold about 76% of its units on the first day of its launch. Contrary to many reports we hear online, are buyers shouting that prices are unaffordable while simultaneously snapping up properties? What exactly is happening in Singapore’s property market? Let’s analyze the situation in 2024 and look ahead to the trends for 2025.
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2024 New Launches Slowdown, Pent-up Demand in Some Areas
If you’ve been following the new launch market, you’ll know that only 1,916 condo units were sold in the first half of 2024 in Singapore. This figure is the lowest sales volume since 2008 (even lower than the 1,977 units sold in the second half of 2008 during the Global Financial Crisis.)
However, in the last weekend of November 2024 alone, new home sales reached 1,480 units, bringing the total for the year to 6,666 units. Looking at data from the past few years, this number still represents a low sales volume for new homes. The concentration of new launches in the last quarter of 2024 may have skewed the overall perception. The hot market we’re seeing at the end of 2024 might be due to the release of pent-up demand. Many HDB upgraders, having waited for new projects to launch in their vicinity, immediately decided to upgrade. Many buyers upgrading to new homes still prefer properties near their current address to stay close to familiar friends, family, and social circles.
Year-End Launches Feature More Projects Near MRT Stations and Large-Scale Developments
Among the new launches in November were two strong contenders – Emerald of Katong and Chuan Park. Both are large-scale new projects that have been highly sought after for various favorable factors, making them some of the most watched projects of 2024. Large developments with over 1,000 units might lack some privacy, but they often come with more competitive pricing, lower maintenance costs, and more amenities. Many people specifically choose larger projects.
Furthermore, without direct access to an MRT station on the Thomson-East Coast Line (TEL), projects like Grand Dunman and Emerald of Katong might not have been as popular. The once-famous Lentor Hills Residences, Lentor Mansion, and Lentoria also sold well thanks to their proximity to the Lentor MRT station.
Return of Low Interest Rates, Buyers Are Optimistic
The US Federal Reserve’s significant interest rate cut in September 2024 had a considerable impact on Singapore. Singapore’s SORA home loan rates tend to be strongly correlated with changes in US interest rates.
However, our predictions about the macroeconomic environment often don’t accurately capture market trends. After the US election, Trump’s tariff policies could lead to higher inflation, prompting the Fed to raise interest rates to combat it. This could mean that rates won’t be as low as expected.
Regardless, lower mortgage rates mean smaller monthly payments and better investment returns. While this may not be the primary reason for buyers to purchase, it certainly helps drive their decisions.
Funds from Other Investment Channels Start to Overflow
Recently, with the stock market and cryptocurrencies soaring, cash-rich investors may be cashing out. These funds could flow into the property market in search of the next investment opportunity. Private property is an excellent destination for these funds: firstly, it is a safe-haven asset that can be used to “lock in” any gains. Given the current situation, the next four years are expected to be more volatile, and real estate can be a lower-risk component of an overall investment portfolio. Secondly, real estate serves as a good hedge against inflation.
Affluent local Singaporean buyers might opt for a “sell one, buy two” strategy, as they do not have to bear the Additional Buyer’s Stamp Duty (ABSD).
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Relatively Affordable Property Prices
Let’s be clear: anyone who dares to say property prices are cheap now will be heavily criticized. The truth is, when we say prices are cheap, it’s relative to land prices. In terms of land supply and cost, recent bids for Government Land Sales (GLS) plots have been low, with fewer bidders, and some bids were rejected for being too low. The government is also clearly trying to increase land supply to cool the soaring prices of the post-pandemic era. This could also lead to a drop in condo prices, as developers have more room to reduce prices. Logically, an increase in supply should also drive prices down.
However, most people disagree with this view. In fact:
First, developers tend to maintain current market prices, even if they acquire land more cheaply.
Second, some of the ultra-low or rejected bids are extreme cases. One reason is the government’s insistence on developing long-stay serviced apartments, in which developers have little interest. Another reason is that many of these sites are in the CBD and prime districts, and developers are reacting to the high ABSD tax that foreign investors must pay.
Therefore, lower land prices for GLS plots will not necessarily bring down property prices. Time will tell, but for now, we see that new launch prices have stabilized, with developers trying to keep them at a reasonable level.
Singapore Property Market Trends for 2025
Despite the various opinions we hear online, complaints about unaffordable housing prices do not necessarily reflect the true market situation. Contrary to appearances, Singapore’s private property market can withstand high prices. As we enter 2025, new launches in Singapore are expected to remain hot and attract cash-rich investors.
Leo Kwek, a senior property expert at Anjia SG, states: “This year’s growth momentum will continue into next year. Firstly, the prospect of interest rate cuts will stimulate positive sentiment among buyers. Secondly, upgrading demand still exists, and new projects with strong advantages will continue to attract new demand. Upcoming projects have their own unique features, and those with clear advantages will continue to see strong buying interest. Future large-scale projects include The Orie in Toa Payoh, which is highly favored due to its proximity to an MRT station and several prestigious schools. Moreover, with many surrounding HDB flats reaching their MOP, buyers with the financial capacity and upgrading needs may trigger another wave of property buying.”
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