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December 14, 2022

PropNex CEO: 2023 To Offer More Certainty And Private Housing Options For Home Buyers

By Wong Siew Ying, with comments from Ismail Gafoor

No stranger to property market cycles, Ismail Gafoor, CEO of the largest real estate agency in Singapore and an avid property investor – is seeing a silver lining amidst growing concerns about the health of the global economy in 2023, as aggressive rate hikes are expected to throttle economic growth. PropNex Picks caught up with Ismail to find out what is driving his optimism for the residential property market in Singapore and what home buyers can look forward to in the new year.


1. What has been the biggest property market highlight of 2022 for you, and why?
ISMAIL: What stood out for me in 2022 was the fact that Singaporean buyers – in the pursuit of a condo lifestyle and an asset that could help to better secure their future – were prepared to pay more than $2,000 psf for a new private home in the Outside Central Region (OCR) market. We saw this at AMO Residence, Sky Eden@Bedok, and Lentor Modern. These projects achieved new benchmark average prices and helped to lift overall OCR prices.

If you had told me 3 years ago that OCR prices would cross $2,000 psf in 2022, I would not have believed it. It’s unimaginable as OCR prices averaged around $1,400 to $1,500 psf in 2019. I might add that even prices in the Rest of Central Region (RCR) have pulled closer to that of the Core Central Region (CCR) in 2022.

Buyers, by and large, know of the lay of the land today. There is a general awareness of that the rising cost of construction, manpower and materials, the higher land price, and supply chain disruption have placed an upward pressure on prices of new launches. They are willing to enter the market at the current price levels. In addition, they have considered the resilience of the Singapore property market, that despite the Covid-19 pandemic and challenges, prices have continued to scale new peaks.

Private home prices grew 10.6% in 2021 and looks on track to book another 9% to 10% growth in 2022. The question of whether this is sustainable did cross my mind, and I think the price growth will be slower but it is unlikely that we will see a downward correction. The transacted prices today have laid down a marker so to speak, I don’t think the average price of OCR new sales will go back to the levels we saw in 2019, and it is unlikely to trend below $2,000 psf. Home prices will remain firm because costs have shot up substantially.

Another eye-catching trend would be the record-breaking number of HDB resale flats that were sold for at least $1 million. As at end-November, more than 340 such flats have been transacted in 2022 – surpassing the 259 units resold in the entire 2021. Based on our observations, a number of the million-dollar flat purchasers are downgrading from private homes. To this end, we anticipate that the new 15-month wait-out period introduced as part of cooling measures in September 2022 will help to moderate the strong demand for larger flats in prime locations.

Overall HDB resale prices which have jumped by 12.7% in 2021 continue to see a strong growth momentum in 2022. We expect HDB resale prices may rise by up to 10% for the whole of 2022.

To sum up, the highlight of 2022 really is about the strength of the purchasing power of consumers in Singapore. Households generally have a strong financial position and there is ample liquidity in the market to continue to support and drive the property market.

2. How nervous are you about 2023 given all the talks about a global recession? What are some factors that will help to underpin the residential property market?
ISMAIL: Actually, I am cautiously optimistic. While there have been concerns about a global recession in 2023, I am sanguine about the outlook ahead for the property market. In 2022, we have seen central banks – led by the US Federal Reserve – in tightening their monetary policy to combat decades-high inflation. The Fed hike rates aggressively with a fourth consecutive 75bps hike in November 2022 but comments by the Fed Chair Jerome Powell suggest that there is a possibility of smaller rate hikes ahead. I believe this will offer a measure of certainty to home buyers when they are looking to enter the market in 2023 – knowing that the most aggressive rate hikes have been front-loaded in 2022.

The low interest rates we have witnessed since the global financial crisis are an anomaly. What is happening now is the normalisation of interest rates, and many home buyers have recognised this as well and planned their finances accordingly. Understanding where interest rates are heading will help home buyers and owners make sound decisions and take advantage of opportunities when they arise - rather than waiting for interest rates to fall to yesteryears’ level.

Despite the global headwinds and uncertainties, I think many Singapore households are in a relatively good position to weather the turbulence as the labour market remains tight and household balance sheet is healthy. The government also continues to drive industry transformation and support new growth sectors which will spur Singapore’s economic prospects.

Meanwhile, Singapore – as a reputable wealth management and global business hub – continues to be a safe haven for global investors amid geopolitical tensions elsewhere. Singapore’s appeal as an investment destination has only shone brighter with its effective handling of the pandemic and successful transition to living with Covid-19. Foreign buyers accounted for 6.8% of overall new private home sales in 2022 (till end-November) – the highest in recent years - as Singapore eased most of the pandemic restrictions from April. Singaporean buyers will form the bedrock of home sales in Singapore, but the interest from foreign investors will help to bolster demand for luxury residential projects in the city.

Another factor that will help to underpin the residential property market is the injection of new launches in 2023. By our estimates, some 12,000 new units (including EC) could be placed for sale by developers – more than double what was launched in 2022. The new supply will feed the strong appetite for homes and we should see healthy new private home sales in 2023.

So, there are reasons to be optimistic and we hope 2023 will see another good year in the property market – with more options for buyers and potentially a more stable interest rate environment.

3. Where do you see private home prices and HDB resale prices heading in 2023?
ISMAIL: In view of the imbalance in supply and demand, we expect both private home prices and HDB resale prices to continue to be resilient in 2023. They should growth further, albeit at a slower and more sustainable pace compared to 2021 and 2022.

For private homes, we estimate that overall prices may climb by 5% to 6% in 2023 – generally keeping pace with inflation. Within this, non-landed homes in the CCR could see prices rise by 5% to 7%, RCR prices may grow by 6% to 8%, while OCR prices could trend up by 4% to 5%. Developers’ sales could come in at around 8,000 to 9,000 units (ex. EC), marginally higher than 2022.

For HDB resale flats, prices could likely grow by 6% to 8% in 2023, as this segment will continue to be supported by a sizable demand pool. Owner occupiers with a tighter housing budget, those who are looking at downgrading/right-sizing, as well as buyers who do not wish to wait 3 years or more to get their BTO flats will head for the HDB resale market. We anticipate resale flat volume in 2023 will hover around the 27,000 to 28,000 level – on par with 2022.

4. What are some buying options for home buyers (first-timers/upgraders) next year? What would you recommend?
ISMAIL: In 2022, there was pent-up demand for private condo launches and we saw robust take-up of new projects in the primary market. We expect home buyers to have more options in 2023 with many more new launches slated to hit the market. For new launches, buyers have a first-mover advantage and tend to be able to secure units at the most attractive prices as developers usually start off with competitive prices before raising them once they hit a certain threshold of sales.

Some upcoming launches (that have more than 500 units in the development) that buyers and HDB upgraders can look at include:

For those with more pressing housing needs or more limited budget, they can always look at the private resale market. On the whole, resale prices have been rising at a slower pace compared with that of new launches. As at Q3 2022, the median unit price gap between new non-landed private homes and resale units was about 49%.

Buyers who are keen to know more or need professional help in charting their real estate purchase/investment journey can contact anyone of PropNex’s 12,000 salespersons for timely insights and customised solutions. In addition, sign up to PropNex Friends to receive research reports so as to keep ahead of real estate trends.

5. What are your top 3 business priorities for PropNex in 2023?
ISMAIL: In all we do, we are guided by the company’s mission to add value to our stakeholders, whether they are our salespersons, our staff, business partners, or general consumers. I would say 2023 is about continuing to up-scale some of the initiatives that have been set in motion in 2022.

One key priority is to help our salespeople achieve greater productivity. This will include developing and enhancing tech-aided tools, such as our PropNex Investment Suite app – a one-stop digital solution which offers up-to-date real estate data and analysis at one’s fingertips. So far, we have garnered very positive feedback from agents who found it to be extremely beneficial in presenting real estate statistics and trends to their clients in a clear and concise manner. They can very easily pull out the transaction data by room types, or rank the districts by sales volume and average unit price, or toggle to the tower view where it shows the transaction data for each unit of the development by floor and stack within the building, for example. It is an engaging and dynamic digital platform and we are going to enhance it even further with new features.

My second priority in to scale up our consumer education and empowerment programmes, as part of PropNex’s efforts to help improve financial literacy skills for the public, especially among young people. In 2022, we held numerous in-person seminars, online webinars, the PropNex property expo, the Property Wealth System masterclass, and our inaugural Monopoly Championship. We will continue to offer these programmes in 2023 with new content, but on a bigger scale and wider reach. Our aim is to share insights and analysis of the market as well as lessons from our own investment journey, and hopefully the information will help consumers make sound decisions later on, whether they are buying a home for own stay or for investment.

The third priority has to do with sustainability. This includes driving more environmentally sustainable business practices, such as reducing energy use, cutting down waste, encouraging recycling, and stepping up on digitalisation to reduce the use of paper in business processes. We will assess our commitments to sustainability and see how we can further integrate it into business decisions and engage the whole organisation on the journey. Sustainability has become increasingly critical for businesses to remain relevant and competitive, but more importantly, it enables corporations to consider their impact on society and the environment.

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