SG property market promises high return for investors

Housing Board upgraders bought fewer but pricier homes in the third quarter of 2023, which created promising insights to the Singapore property market.

Increased transactions in pricier private homes signal a buoyant market, with high-end sales driving growth and promising returns, says Timothy Eng, Assistant Manager of Research & Analytics at OrangeTee & Tie.

According to Eng, there was a slightly higher proportion of pricier new homes bought in the second quarter this year, which may have helped push the prices upwards.

“On the whole, investors are confident in the property market in Singapore where prices have remained stable and natural properties will continue to be attractive to high net worth individuals and wealthy investors given our safe haven status and positive capital returns,” he said.

Eng added that private homes have become pricier, along with the increase of the cost of land and construction. With elevated interest rates still in the loop, home prices per square foot will similarly rise.

This increase is buoyed by the rising HDB resale flat prices, affording upgraders more capital to invest in pricier properties. Additionally, the need for larger homes drives up the total contract price.

“For buyers who are upgrading from public housing, rising HDB resale flat prices may also support the price growth of private homes as upgraders now have more capital and may purchase price samples,” he said.

“Moreover, those families will need to purchase a home with a larger area and together with the increased cost per square foot of private homes, this will result in larger overall price contracts for private houses,” he added.

Eng forecasts that the private home market will be influenced by the interest rate environment, with homeowners bracing for higher monthly mortgages. However, potential investors are advised to navigate the higher Additional Buyer's Stamp Duty (ABSD) rates and wait for opportune moments to invest.

Despite geopolitical uncertainties and slower global economic growth, Eng predicts a price growth of about 4 to 5.5 percent for the year and a total sales volume ranging between 17,000 to 19,000 units, which, although lower than 2022's figures, still signals a resilient market.