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Key Trends For The Singapore Property Market in 2024: What To Expect?

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Singapore’s property market is renowned for its vibrancy and resilience, constantly adapting to domestic and international shifts. The past year has been no exception, with the market navigating through a series of regulatory changes and economic fluctuations that have set the stage for what’s to come. As we embrace 2024, these factors shape the property market and influence investment decisions and buyer preferences across the city-state.

Several transformative trends have emerged amid these changes, poised to dominate the real estate sector in the coming year. These developments carry implications for buyers, from evolving financing options to a renewed interest in specific properties. In this blog, we’ll offer insights into what buyers can expect and how they can best prepare for the opportunities and challenges ahead.

1. Higher Occupancy Limits: A Win for Landlords and Tenants

Singapore’s evolving rental market is poised for significant transformation following recent adjustments to occupancy regulations for residential units.

The authorities have expanded the occupancy cap, allowing up to eight unrelated individuals to cohabit in 4-room or larger flats, as well as in private properties that exceed 90 sqm. This development, an increase from the previous cap, is aimed at enhancing the flexibility of housing arrangements and addressing the growing demand for affordable living spaces.

This regulatory change is a boon for both landlords and tenants. Landlords stand to benefit substantially, as they can now maximise their rental yields by accommodating additional tenants. It is particularly advantageous given the softening of the rental market observed as early as the second and third quarters of 2023.

For tenants, especially those on tighter budgets or looking to share living expenses, the increased cap offers access to more affordable housing options in a market renowned for its high rental costs. The opportunity to take on roommates can significantly reduce individual living expenses, making this adjustment a timely response to the need for more cost-effective housing solutions.

The implications of these revised occupancy limits extend to the broader dynamics of Singapore’s rental market. As landlords adapt their properties to accommodate more tenants, a notable shift in rental prices may emerge in 2024, particularly in areas with a high demand for shared accommodations.

Despite the potential for rental rates to dip due to an increasing housing supply and the completion of new projects, the increased occupancy cap could balance rental costs in the short term. This adjustment can make the market more accessible to a range of occupants, encouraging a more efficient use of residential space and fostering a more vibrant and diverse rental market.

Moreover, with the rental market softening, tenants may find themselves with more bargaining power in 2024. This shift could lead to more favourable lease terms and conditions for renters, further enhancing the attractiveness of shared living arrangements and contributing to a more dynamic and adaptable rental landscape in Singapore.

2. Shift Towards More Flexible Home Financing Options Amid Anticipated Rate Cuts

In the wake of COVID-19, the Federal Reserve’s aggressive rate hikes starting in March 2022 have significantly influenced global financial markets, including Singapore’s.

These increases inadvertently led to higher home loan interest rates aimed at combating inflation, impacting affordability and the overall appeal of mortgages in Singapore. Homebuyers and investors faced a challenging environment marked by rising borrowing costs.

Entering 2024, however, the landscape is poised for a change. With US inflation pressures easing and a gloomier economic outlook, the Fed has signalled a shift in its stance, hinting at a potential series of interest rate cuts.

Experts anticipate three to six rate cuts over 2024 and 2025 – a move that could see Singapore’s home loan interest rates follow suit, becoming more affordable and attractive to borrowers. This expected development is prompting a significant reconsideration of mortgage options, particularly between fixed and floating rate loans.

As the market prepares for these adjustments, a noticeable trend is the move away from fixed-interest home loans, especially as we advance into the latter half of 2024. The initial stability of fixed-rate loans may become less attractive if interest rates drop, leading borrowers to favour floating rate options that promise lower rates in a declining interest environment.

This shift towards more flexible financing options may become more evident as borrowers aim to take advantage of decreasing interest costs and the potential for greater market fluidity.

Despite their gradual implementation, the anticipation of rate cuts is causing borrowers to reassess their mortgage strategies.

While the prospect of cheaper home loans offers a glimmer of hope for buyers, it’s a development that warrants cautious optimism, especially for investors considering Additional Buyer’s Stamp Duty (ABSD) rates and the market’s overall sentiment. Nonetheless, existing landlords grappling with falling rental rates may find some relief as the cost of financing becomes more manageable.

3. Renewed Focus and Interest in Aged, Multi-Use Developments

In 2024, Singapore’s urban landscape is on the brink of a significant transformation, driven by a renewed focus on the redevelopment of aged, multi-use developments. These complexes, which blend residential, retail, and office spaces, are pivotal in revitalising and repurposing older buildings in prime locations, meeting modern live-work-play demands.

At the heart of this rejuvenation effort are iconic projects like the Golden Mile Complex and Peace Centre/Peace Mansion, which aim to preserve the architectural heritage and urban character and adapt these spaces for contemporary use.

The interest in such mixed-use developments, especially among young couples and singles, underscores the potential for these projects to reshape Singapore’s cityscape.

The success of the Golden Mile Complex and Peace Centre/Peace Mansion redevelopment projects is being closely monitored. Initially met with scepticism due to the scale and feasibility of redevelopment, the acquisition of the Golden Mile Complex by Far East Organisation, Sino Land, and Perennial Holdings for $700 million has marked a significant turning point.

Similarly, the Peace Centre/Peace Mansion, once regarded as an eyesore despite its prime location, is now seen as a project with tremendous potential for transformation. The progress of these redevelopments could catalyse a ripple effect, encouraging renewed interest in similar aged, mixed-use properties across Singapore, such as Orchard Towers or Sultan Plaza.

The implications for developers are profound. Redeveloping these mixed-use properties requires a nuanced approach that balances modernisation with the preservation of distinctive characteristics.

Yet, the potential rewards are considerable, offering attractive returns and the opportunity to contribute to Singapore’s architectural legacy and community vibrancy. As these projects gain traction and demonstrate success, developer interest and investment in rejuvenating similar aged, mixed-use properties would increase, signalling a new chapter in  Singapore’s urban redevelopment.

This trend towards embracing sustainable urban development practices underscores a broader recognition of the value of rejuvenating existing structures rather than replacing them.

As more stakeholders acknowledge the benefits of such projects, Singapore’s urban landscape is set to evolve, reflecting a commitment to preserving its rich heritage while adapting to the needs of modern urban living.

4. Core Central Region: Navigating the New Landscape for Bargains

Singapore’s Core Central Region (CCR) has long been synonymous with luxury and exclusivity in the city-state’s real estate market. Renowned for attracting foreign investment and high-net-worth individuals, the CCR is experiencing a dynamic shift due to a combination of cooling measures and economic factors.

Notably, the increase in Additional Buyer’s Stamp Duty (ABSD) rates for foreigners, announced in April 2023, has tempered the enthusiasm of international investors and led to a more cautious investment approach.

This recalibration in the investment climate, alongside an anticipated surge in unit supply, is set to place downward pressure on property prices within the CCR. Our year-end review revealed that the CCR’s average gains in 2023 stood at a mere 1%, a stark contrast to the double-digit increases observed in other regions.

The anticipated supply for 2024, cited by Huttons Asia in a report, is expected to be the largest since 2021, with approximately 2,968 units hitting the market. This influx of new units could further soften prices, making the CCR an increasingly attractive domain for bargain hunters, especially local buyers and long-term investors eyeing high-value properties at reduced costs.

The cooling measures, initially designed to stabilise the market and enhance accessibility for Singaporeans, seem to be paving the way for a new era in the CCR. Prospective buyers now find a unique opportunity to secure properties in this coveted region at more competitive prices.

Developers, recognising the need to invigorate the market, may offer more favourable terms and conditions to attract interest and sales in this adjusted landscape. Such developments could spell better deals and potentially higher long-term returns for discerning buyers ready to explore the CCR during this transformative phase.

Moreover, redevelopment projects like the Golden Mile Complex and Peace Centre/Peace Mansion within the CCR underscore the region’s evolution. These projects highlight the potential for rejuvenation and signal the broader shifts across the CCR’s property market.

As a result, 2024 could mark a pivotal year for the CCR, presenting challenges and opportunities for investors and homebuyers as they navigate this new hunting ground for bargains.

5. Stabilising Prices Amid Easing Supply Constraints

As Singapore’s property market edges towards a more balanced equation of supply and demand, a significant shift in property prices across the island.

Following a period where tight supply constraints led to a sharp increase in property values, there’s now a noticeable easing as developers escalate the launch of new residential units. This change is poised to stabilise prices that had escalated rapidly, especially in the post-COVID-19 recovery phase.

The year 2024 will witness a remarkable increase in the pace of new unit launches, a deviation from the trends of previous years. According to various property firms, projections indicate the market could see anywhere from 8,000 to over 11,000 new units.

It represents a substantial increase over the roughly 7,500 units introduced in 2023, suggesting a significant response to the persistent demand with an expanded inventory of available properties.

This adjustment towards equilibrium between supply and demand marks a turning point, highlighting a slowdown in transaction volumes and an average private home price increase of about 6.7% in 2023, a decrease from 8.6% in 2022.

The anticipated higher supply in 2024 may further moderate the rise in prices. Although, it remains uncertain whether prices will decline given the financial pressures on developers and the strong capital positions of sellers. However, the feverish pace of price increases witnessed immediately after the pandemic is unlikely to continue.

With prices stabilising in 2024, potential buyers are becoming increasingly discerning, focusing more on value, location, and amenities rather than rushing to buy in a rapidly escalating market.

This shift could lead to a more calculated approach to property investment and ownership, easing the pressure on buyers to make hasty decisions and encouraging them to seek properties that align with their long-term needs and preferences.

The stabilisation might also encourage first-time buyers, previously daunted by high prices, to consider entering the market, buoyed by a broader array of options that meet their financial and lifestyle goals.

Despite these positive trends, prices remain on the higher side, challenging HDB upgraders who find the average new launch three-bedroom units, still priced around the $2 million mark, beyond their comfort zone.

It has led to a continued interest in larger, older resale properties for families or lower-quantum projects in the Outside Central Region (OCR), suggesting a nuanced buyer response to the evolving market conditions.

6. Resurgence of the Luxury Real Estate Market

The Singapore luxury real estate market is on the cusp of a significant resurgence, driven by a combination of local affluence, foreign investment interest, and a global pursuit for prime assets in politically stable and financially secure environments.

With the world gradually emerging from the shadows of the pandemic, the appetite for high-end properties, especially in coveted areas like Orchard Road (District 9) and Sentosa, is expected to increase markedly. This resurgence is not just about the intrinsic value of the properties themselves but also the lifestyle, status, and security they offer to their owners.

High-end developments in these prime locations are not just seen as places of residence but as blue-chip investments that are likely to appreciate over time.

The demand for luxury properties in these areas is fuelled by their unmatched location, superior design and architecture, and comprehensive suite of amenities. These factors make them perennially attractive to high-net-worth individuals looking for exceptional homes or lucrative investment opportunities.

Singapore’s position as a financial hub and a haven for capital is expected to attract more foreign buyers. This influx, coupled with the limited supply of luxury properties in prime districts, is set to drive continued demand and price appreciation.

The luxury real estate market’s revival is thus characterised by a confluence of favourable conditions, promising robust growth and investment returns for those looking to participate in Singapore’s premium property segment.

7. Growing Demand for Properties Near MRT Stations

In recent years, Singapore has seen a significant shift in transportation preferences among its residents, with an increasing number leaning towards public transit as a primary mode of commuting.

This change is primarily driven by the escalating costs of vehicle ownership, enhanced public transport infrastructure, and a growing societal emphasis on sustainability. Consequently, properties located near MRT stations and bus interchanges have surged in popularity, significantly impacting the choices of homebuyers and investors alike.

The success stories of recent developments underscore this trend vividly. Projects like J’den and Reserve Residences, which offer direct access to MRT stations, have witnessed high demand even in periods close to the implementation of cooling measures.

For HDB developments, notably, the upcoming Plus model flats (like the Bayshore estate) are strategically positioned close to the MRT station serving their neighbourhood. A strong interest in these flats, despite the 10-year Minimum Occupation Period (MOP) and specific eligibility criteria, would further highlight the increasing preference for lifestyles not dependent on car ownership.

All this highlights a clear preference for convenience and accessibility in property selection, with buyers willing to premiumise such locations for reduced commute times and enhanced connectivity to the city’s key districts.

Looking ahead, the implications for residential property developments are profound. Developers are more inclined to secure plots near MRT stations, anticipating strong buyer interest. This focus may influence future project designs, incorporating features that appeal to a transit-oriented demographic.

Furthermore, this trend could drive urban planning and zoning decisions, with authorities possibly prioritising the development of mixed-use complexes and residential areas around transportation hubs.

As Singapore continues to expand and enhance its public transportation network, the value of properties located near integrated transportation hubs is likely to keep rising, shaping the landscape of the property market and urban development for years to come.

Final Thoughts

As we’ve explored, the 2024 Singapore property market is shaped by distinct trends: from higher occupancy limits and shifts towards flexible home financing options to the resurgence of luxury real estate and growing demand for MRT-adjacent properties. These trends signal a dynamic and evolving market landscape that offers both opportunities and challenges for buyers.

To navigate these trends successfully, homeowners and buyers should stay informed about market developments and remain adaptable to changing conditions. Whether you’re seeking a new home or an investment opportunity in 2024, embracing these insights can guide your decisions in the thriving Singapore property market, ensuring you make the most of its potential.

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