The number of completions or private homes obtaining TOP (Temporary Occupation Permit) will reach a seven-year high next year. Although many units were bought for owner-occupation after the government raised the Additional Buyer’s Stamp Duty (ABSD) in 2018, some units will be resold or leased. 

Among the completions, around 50.1 per cent of the 18,234 units (excluding EC) or 9,139 units are in the suburbs or Outside Central Region (OCR). Therefore, supply in OCR will be ramped up by 291.2 per cent from the estimated 2,336 completed units in 2022. The increase in housing may ease some supply crunch in the suburbs. The larger OCR project completions, including EC, are Treasure at Tampines, Parc Clematis, The Florence Residences, Piermont Grand, Sengkang Grand Residences and OLA. 

In the city fringe or the Rest of Central Region (RCR), 36.3 per cent or 6,617 private homes excluding EC are expected to be completed. The largest projects are Avenue South Residence, Riviere, and Daintree Residence. In the luxury market or Core Central Region (CCR), 13.6 per cent or 2,478 units will be completed, including Leedon Green, Kopar at Newton, One Holland Village, Cuscaden Reserve and Haus on Handy. 

Up to seven large projects with more than 500 units may be launched next year, up from one major launch in 2022 and four in 2021. With more launches, we estimate that new sales volume may rise to between 8,500 and 10,000 units in 2023. New home prices may rise by 5 to 8 per cent next year. 

Although many private homes will be completed next year, the number of completions may dip by 34.8 per cent from 18,234 units in 2023 to 11,889 units in 2024. In the OCR, there could be a more significant drop in future supply, slipping by more than 50 per cent from an estimated 9,139 units in 2023 to around 4,232 units in 2024. The expected completion will fall further to an estimated 2,503 units in 2025. 

Therefore, resale prices, especially in the suburbs, may grow faster from mid-2024 when demand catches up with supply. Therefore, next year’s slower price growth may be a good buying opportunity for home buyers.

We do not expect a major price correction next year. Strong employment sustains sellers’ pricing power, and they may not be inclined to lower prices too excessively. However, housing affordability will be paramount to most buyers as they face uncertainties amid the inflationary landscape and rapidly changing interest rates. A spiralling cost of living and multiple cooling measures may further damper the pace of price growth. 

As the era of low-interest rates may not return anytime soon, most buyers will likely be prudent in their home purchases. Further, the continual waves of Covid variants, political tumult and civil unrest in various countries, inflationary pressures, and rate hikes will continue to weigh on buying sentiment. Therefore, prices of private homes are forecast to climb at a slower pace of around 5%-8% next year, down from 9%-11% this year. 

The gap between buyer-seller price expectations may cause fewer deals to be closed or deals to take longer to seal. This slowdown may be mitigated by more completed homes ready for resale next year. The net impact may see slower demand, with around 19,000-22,500 private homes transacted in 2023, down from 20,700-21,800 units in 2022 and below the 33,557 units in 2021.