Deciphering Residential Market Opportunities For 2025

It has been a year of two halves in 2024, and to be more precise, a year where the fourth quarter almost single-handedly propped up new private home sales, with more than 3,000 private homes (ex. EC) sold in Q4 (till 26 November). This takes new home sales to 6,256 units (ex. EC) in roughly the first 11 months of 2024, and overall sales should exceed the 6,421 units shifted in 2023.

Over in the HDB resale market, flat prices continued the upward march in 2024, supported by resilient demand from flat buyers. The HDB resale flat prices rose by a cumulative 6.9% in the first nine months of the year, and look set to outdo the 4.9% price growth in the whole of 2023. In August 2024, the government intervened by cutting the loan-to-value limit for HDB housing loans from 80% to 75% in a bid to cool prices.

Undoubtedly, prospective buyers and investors will be wondering what lies ahead in 2025. PropNex Picks put some burning questions to Deputy CEO Kelvin Fong, and KEO Lim Yong Hock for their take on the real estate opportunities and segments to watch for in the new year.

1. Where do you think are the bright spots/opportunities for the property market in 2025?

We have ended 2024 on a high note, with record-breaking sales at some new launches in November. I think the first half of 2025 could be crucial, and prospective buyers will be watching interest rates to see if they will come off a bit more. The thing is, when interest rates fall, housing demand will rise, this could in turn influence home prices. So, this is something consumers should note.

Some of the opportunities in 2025, I would say given the bump-up in OCR new launch prices, executive condos (EC) could look very attractive to eligible buyers. In addition, we could see some buyers shifting their attention to RCR properties, due to a narrower price gap between RCR and OCR homes. Based on URA Realis caveat data up till 26 November, the average unit price gap between new private non-landed homes in the RCR and OCR was 12% in Q4 2024 (see Table 1) - some buyers may opt to take the leap to purchase homes in the city fringe.

Table 1: Average unit price of non-landed new private homes & EC by Region, and price gap (%)

Source: PropNex Research, URA Realis (*data till 26 Nov 2024)

Another point to consider is that residential land prices in Singapore are not likely to fall substantially - the government has in 2024 decided not to award three government land sales sites because the bids were too low. In a way, this helps to uphold land values, and with rising costs and confidence returning among developers for land acquisition, it is unlikely for home prices to see a sharp drop in the coming years, barring unforeseen events.

2. The CCR market has been muted since the hiking of additional buyer's stamp duty (ABSD) rates in April 2023, what's your outlook for this segment in the year ahead?

The CCR new home sales market has been relatively quiet, partly due to the ABSD rate hike since April 2023, as well as fewer major launches in this segment in 2024. With new launch prices staying firm across the other sub-markets, prospective buyers may want to explore the existing unsold stock in previously-launched projects - they could potentially buy a CCR property at close to RCR prices.

For instance, the average unit price of new units sold at One Bernam in the city centre was $2,784 psf in 2024 (till 26 Nov) based on URA Realis caveat data. This is only 5% higher than the average unit price of RCR new homes at $2,645 psf over the same period. Generally, CCR homes tend to command higher rentals than RCR units because they are in the city and they have more convenient access to various amenities. Therefore, value-buys in the CCR coupled with and firm rentals may translate to good rental yield for the investor.

The reasons why some existing CCR projects are priced competitively may be that the developers had bought the land at a more moderate price previously, and also to drive market activity, since there haven't been that many launches in this segment in the past year. Those who are keen on getting into the CCR market can connect with any of the PropNex agents, who will be able to make recommendations that are customised to clients' needs.

3.An estimated 14,000 new homes (including ECs) may potentially be launched in 2025 - doubling the number of units launched in 2024. With more launches, it could promote competition among developers, how do you see private home prices trending in 2025?

Private home prices in Singapore have been rising for seven years since 2017, and on track for an eighth straight year of increase in 2024. Barring any hiccups, I believe 2025 will be a positive year for the housing market, in view of the easing interest rates, sales momentum from launches, and the favourable economic outlook. As for how prices will trend next year, prospective buyers will do well to consider these factors: 1) robust sales at launches in November; 2) an OCR project's average price has crossed $2,500 psf; 3) strong interest for well-located projects; and 4) firm land price, high construction cost, and effects of GFA harmonisation. Do you think prices will fall next year?

4.What is your advice for first-timer homebuyers and property investors in 2025?

The burning questions among many first-timer homebuyers and investors include, 'are prices too high to enter the market now', and 'will I be able to exit in the future if I buy at today's prices?'. In my view, they will have to look at purchasing a property as a long-term commitment. While prices may fluctuate over the short-term - perhaps due to cooling measures, or various uncertainties/events - what has been the price trend over the longer-term? Has it been positive?

Generally, I would say Singapore private residential properties have a good track record. The URA PPI has its ups and downs naturally, but each high point has been higher than the previous highs, and even the dips have been higher than previous troughs (see Chart).

Chart: URA Property Price Index - good track record of private home prices weathering crises through the decades

Source: PropNex Research, URA

Another point to consider is that residential land prices in Singapore are not likely to fall substantially - the government has in 2024 decided not to award three government land sales sites because the bids were too low. In a way, this helps to uphold land values, and with rising costs and confidence returning among developers for land acquisition, it is unlikely for home prices to see a sharp drop in the coming years, barring unforeseen events.

As for concerns about whether there would be buyers for their property in the future, I believe our housing eco-system is such that there will be a certain demand pool that will be fed to the next property segment (see Diagram), and this is an ongoing cycle. For instance, at the base, the government will ensure that the masses will have access to affordable public housing, some of these flat owners may subsequently sell and upgrade to private home, then to a landed home, and so forth. These will be some of the discussion points in our Property Wealth System (PWS) masterclass in May 2025 - do sign up to learn more. Our PWS sessions have been well-attended and many consumers have benefited from it.

Diagram: Three stages of property investing

Source: PropN