PropNex Picks

December 28, 2022

What Does The Property Market Hold For HDB Upgraders In 2023?

By Wong Siew Ying, with comments from Lim Yong Hock

Another year, another price increase. Both private home and HDB resale flat prices continued on their upward trajectory in 2022, and despite varied challenges during the year – accelerated interest rate hikes, geopolitical tensions, macroeconomic uncertainties, and cooling measures – housing demand has held up quite well. PropNex Picks asked key executive officer Lim Yong Hock about what stood out for him in 2022 and some recommendations for home buyers – especially HDB upgraders – on what they can potentially look out for in 2023. Read on to find out.


1. What has been the biggest property market highlight of 2022 for you, and why?
YONG HOCK: There are three key highlights for me. The first is witnessing mass market (or Outside Central Region) new private homes clocking prices above $2,000 psf to even $2,500 psf. New OCR launches in 2022 – such as AMO Residence, Lentor Modern, and Sky Eden @ Bedok – have garnered average prices of over $2,100 psf (see Table 1).

Based on URA Realis caveat data, Singaporean buyers accounted for about 89% of the non-landed new private homes (ex. EC) sold in the OCR in 2022. In my view, this shows the resilience of the market with strong local demand helping to drive sales despite the firmer OCR home prices in 2022. What we have observed is that the rapidly declining unsold stock in the OCR, high land price and rising construction costs have all contributed to the upward pressure on prices of new launches.

Another highlight is that many of the new launches that hit the market in 2022 have achieved robust sales of 75% to 90%, including Sky Eden @ Bedok, LIV @ MB, Piccadilly Grand, Lentor Modern, and AMO Residence. Meanwhile, a couple of EC projects also saw strong take-up: 639-unit Copen Grand is sold out, while Tenet sold 72% of its 616 units. The strength of the primary market demand amid rising interest rates and economic uncertainties certainly left an impression.

Finally, I was also struck by the remarkable pick-up in the home leasing market - 2022 has been a landlord’s market. According to the URA Rental Index of private residential properties, rentals rose by 8.6% from Q2 to Q3 2022, and have climbed by 20.8% in Q3 from the end of 2021. On the ground, we heard that some landlords are looking to almost double rentals because demand is strong. I think the home rental market will remain quite resilient in 2023. Typically, rental contracts are locked in for 1 to 2 years, so there is less tendency for a knee-jerk reaction in the leasing market. However, the pace of rental growth may slow as more new completions – estimated at over 18,000 private homes (ex. ECs) – come on in 2023.

2. Being an expert in HDB housing policies and public housing market trends, do you expect demand for resale flats and flat prices to fall in 2023, why?
YONG HOCK: There will always be some baseline demand for HDB resale flats because they serve a large segment of the population, including first-timer buyers, HDB upgraders looking to move to a larger flat or another location, as well as from singles. In 2021, 1.09 million (or 78%) Singapore resident households live in HDB flats, according to official data.

Given that HDB flats are among the most affordable housing options in Singapore, I anticipate demand to remain steady in 2023, which will help to support prices. Therefore, despite the September 2022 cooling measures, I believe HDB resale prices will hold. With buyers becoming more cautious, I would expect some price resistance to set in and this could ease the pace of price growth in 2023. We are projecting HDB resale prices to climb by 6% to 8% in 2023 and transaction volume could come in at around 27,000 to 28,000 flats.

The 3% interest rate floor and lowered loan-to-value limit to 80% for HDB loans are generally still manageable for buyers and we do not think it will hurt the demand for resale flats. What may trim demand slightly – for larger flats in prime areas and “million-dollar” resale flats – would be the temporary 15-month wait-out period that requires those who have sold their private home to wait 15 months before they can buy an HDB resale flat. There are some exceptions made for seniors looking to right-size their homes, but for other private home downgraders, they will have to wait. Based on our observations, this group of buyers has spurred demand for prime flats and they are also able to pay higher prices/cash-over-valuation for resale flats.

But overall, HDB resale demand will stay relatively stable, driven by buyers who have more pressing housing needs, those who are priced out of the private residential market, as well as families who are not keen to wait too long for new BTO flats to be completed. In addition, eligible first-timer buyers can also tap up to $160,000 in housing grants to help them finance their resale flat purchase.

Meanwhile, the HDB has indicated that it plans to launch 23,000 BTO flats in 2023 – roughly on par with 2022’s supply. I think this will provide ample supply to meet demand and play a part in keeping the HDB resale market stable.

3. Due to the high private home prices, some HDB upgraders may be hesitant to act. What is your recommendation to these flat owners and what are their options in 2023? Also, what are some tips for those hoping to rent homes at a reasonable price in 2023?
YONG HOCK: For HDB upgraders who feel that the prices of new private condo launches are beyond them, I would recommend that they look at the resale market, where prices have not been climbing so quickly. In Q4 2022 (up till Dec 4), the median transacted unit price of OCR new launches is 58% higher than that of OCR resale properties, based on caveats lodged. Our agents will be able to provide advice on the best possible resale options that HDB upgraders can consider according to their budget.

In particular, I want to highlight that a number of EC projects will exit the 5-year minimum occupation period (MOP) in 2023, and some of these 4,130 units may be available for resale should their owners choose to sell (see Table 2). Another point to note about buying newly MOP-ed resale ECs is that they are close to becoming fully private (after 10 years from obtaining the temporary occupation permit). Once they are fully privatised, they can be put up for sale or be leased to foreigners – which may offer some capital appreciation.

As for the leasing market, rental prices are usually negotiable but much would depend on the bargaining power of the tenant at that juncture. In a landlord’s market, tenants typically have weaker bargaining power in view of keen competition for the apartment.

Prospective tenants should start by doing their homework in finding out the rental prices and transactions in the areas that they are considering to rent – they can appoint an experienced PropNex agent to help them with this. Knowing the recent transaction trends will enable them to shortlist homes that better fit their rental budget. They may also want to look at developments or areas with more rental listings as a larger competing supply could persuade some landlords to review their asking rent.

It is also important to leave a positive impression, assuring the landlord that they would be a reliable and responsible tenant. At times, a landlord may be willing to accept a slightly lower rent if they like the tenant. Prospective tenants who have found a suitable unit for rent may not want to drag their feet on the leasing process as this out could mean more interested renters may come into the picture, creating more competition for the unit.

4. PropNex has boosted its number of real estate salespersons to more than 12,000 in 2022. Tell us about some of the initiatives that are attracting agents to join or stay at PropNex.
YONG HOCK: We have shaped a company culture that enables us to attract and retain not just salespersons but our staff too. Apart from being a caring company, we believe in empowering our people to grow professionally, supporting each other in the PropNex family, and appreciating the hard work everyone puts in to help the firm to thrive.

Their voices are heard and valued, and where possible, changes are made. For example, we know that many agents face difficulties while co-broking. Recently, we announced the new Tripartite Standard on Grievance Handling and Co-broking which sets the guidelines on how disputes will be managed and resolved. This will make sure that disputes are handled fairly and offer protection for our agents. In 2021, we launched the PropNex Real Estate Salespersons Chapter – Agents’ Voice Matters to give our agents a platform to raise their concerns as well as share best practices in the industry. These are bold, market-leading initiatives that PropNex has taken to drive professionalism and champion fair practices. They have created a huge wave of recognition among agents and will encourage more of them to join us.

PropNex is also a big believer of consumer empowerment and education, we run numerous events through the year to provide real estate insights to the public. Our webinars and in-person seminars are always popular, so is our new Property Wealth System (PWS) masterclass which we started in 2022. Our first two PWS sessions were fully booked; there is such an overwhelming demand for it, so we are doing another session over the weekend of 29 April 2023. We also held the Monopoly Championship in 2022 to enable consumers to learn about property investment and financial prudence in a fun way. This event was very successful and we will be holding another round of it in 2023.

We are pushing ahead on the consumer education front, and these efforts will also provide opportunities for our agents to re-connect with former clients, nurture their relationships with existing clients, and perhaps meet new ones. We want to create value every step of the way – it is about offering a conducive environment for our agents to excel.

Apart from the heartware – because we care deeply about our agents - we also have software to help them value add to their clients. We have a range of digital tools such as the PropNex Sales Suite, the Risk Analysis Method platform, and the newly launched PropNex Investment Suite that give our agents an edge in the market.

Why do agents join us and stay with us? That’s because PropNex is the complete package, in my view.

5. As KEO, what would be your top priorities for 2023?
YONG HOCK: The primary role of a KEO is to ensure the proper administration and overall management of the agency business as well as the supervision of our salespersons. This is a responsibility that I take very seriously and my priority next year is to continue to ensure that our agents conduct themselves professionally in the interest of consumers at all times, even as they grow their careers with PropNex.

As a market leader, PropNex will continue to play its part in raising professionalism in the real estate industry, setting new standards that will benefit our agents and their clients, and ensuring our business continues to flourish. Just like what we have done in the past, 2023 will be no different – it will be about adding greater value to our salespersons and to the consumers. This is central to what we do at PropNex and we won’t stop.

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