Resurgence of Singapore High-End Housing Market in 2023

By ERA Real Estate, The Bulletin
Published January 2023
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For the past two years, the private residential property price growth accelerated due to limited supply from construction delays and socio-economic factors spurred on by the Covid-19 pandemic. New residential property launches enjoyed fast-paced sales, with some projects setting new benchmark prices.
Among the three property market segments, the biggest change was seen outside the prime Core Central Region (CCR). Non-landed private property prices in the Outside Central Region (OCR) and Rest of Central Region (RCR) shot up by 19% to 27% in the past two years. On the other hand, non-landed property prices in the CCR grew at a steadier rate of 9%.
The slower rate of property price growth in the CCR market could be attributed to the low demand from foreigners during the pandemic, as well as the December 2021 cooling measures when the Additional Buyer’s Stamp Duty (ABSD) for foreign homebuyers was increased by at least 10 percentage points.

Singaporeans are the biggest group of buyers of high-end properties in Singapore, while buyers from China are the second largest group of private homebuyers.
In the three years before the pandemic, from 2017 to 2019, Chinese citizens bought 12.7% of the total number of new housing units in the CCR, making up the largest group of foreign buyers of prime residential properties in Singapore.
During the pandemic from 2020 to 2022, the proportion of high-end homes sold by developers to Chinese buyers shrunk from 12.7% to 5.8%. The proportion of CCR homes bought by other foreign nationalities also declined during the pandemic, which means that there is room for growth from foreign demand.
In 2023, as major global economies open up, more foreign property buyers, including those from China, would come to Singapore. This would boost the demand for high-end properties in the CCR, possibly back to the pre-pandemic level.

Three years before the pandemic (2017 to 2019), around 20 to 33% of primary CCR homes were bought by non-permanent resident (NPR) foreigners. During the 3 years of pandemic, the number of private market property sales dropped to between 10% and 14.5%.
Due to economic uncertainties elsewhere, an increasing number of high net worth foreigners are establishing home offices in Singapore and bring their funds here. These foreigners may not be deterred by the higher ABSD levied on foreign homebuyers due to the allure of Singapore being a safe haven, as well as their preference for real estate as a store of wealth.
As China opens up its borders, more Chinese expatriates are expected to come to Singapore to work, live and invest. This would further increase the number of rich investors house hunting in Singapore, especially in the CCR. Hence the CCR property market resembles a butterfly coming out of its cocoon.

Private properties in the prime market segment are often overlooked by homebuyers as individuals tend to strike them off mentally due to the impression that prices of new launches in the CCR market are exorbitantly high.
However, as the prices of condominiums in the OCR and RCR increased faster than the CCR condominium prices in the last two years, the price gap of private properties in the RCR and CCR is narrowing. As a result, some CCR properties are becoming more attainable for local homebuyers.
Based on the new launches in 2022, median prices of housing units in the CCR were as low as $2,402 psf onwards. In addition, a majority of these CCR projects are freehold properties.

Due to the robust growth of property prices of new launches in the RCR, city-fringe condominium prices are catching up with those in the CCR. From the list of RCR launches below, the median prices of RCR projects ranged from $1,937 psf to $2,880 psf, overlapping the range of new condominium prices in the CCR.
This means that homebuyers only need to top up their housing budgetst to purchase prestigious freehold developments in the prime districts.
Hence, local buyers would need to act fast as the return of foreigners could potentially drive up prices in the CCR property market.

ERA Singapore
T: (65) 6249 3172
W: rnc@era.com.sg

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