2022 was a year of house price growth, with prices still rising 0.2% YoY in the fourth quarter, as property activity fell sharply due to the lack of major properties and holidays.
Rents rose enormously in 2022, outpacing house price growth, with all four quarters seeing increases across the board for all household types, with more significant increases for larger units.
New sales in 2022 reached just over 7,000 units, a significant contraction from the 12,676 units sold in 2021, and the price of a single evaluated foot rose from S$1,808 in 2020 to S$2,314 at the end of 2022.
Meanwhile, new and second-hand sales are both down compared to 2021!
New private residential sales in 2021 were actually lower than in previous years, as the cooling measures at the end of 2021 dampened demand from some new immigrants and developers put fewer new properties on the market.
The average number of new properties sold over the past 10 years has been 11,200, and about 7,120 in 2022.
In total, inventory has fallen year on year, from 36,839 units in the first quarter of 2019 to 14,087 units in the first quarter of 2022.
The third quarter saw a small rebound, with inventory at 15,677 units. By region, there are 5,681 units remaining in the Central Core Region (CCR), 6,579 units remaining on the edge of the Central Region (RCR) and only 3,417 units remaining in the Suburban Region (OCR).
In terms of average annual sales, the OCR is up to 5641, outpacing the existing stock. In comparison, both the CCR and RCR have higher than average annual sold inventory, and there are opportunities to move in in 2023 as these two areas continue to digest inventory.
The overall relatively low inventory is a support for home prices.
Reaching a peak of 31,325 homes in 2022, it is expected to decline significantly over the next two years, with a drop of around 50% in 2023 alone.
Coupled with high interest rates and the rise in private housing, fewer buyers are expected to upgrade from HDB flats to private homes, and the tightening policy in 2022 squeezes out mass market purchases.
The number of villas (locally known as landed homes in Singapore) sold in 2022 is sharply lower than in 2021, with the total number of units slightly below 2,000, but the total price reached S$10 billion, exceeding the average total price over the past 18 years, but the number and total value are substantially lower than in 2021.
Villa prices are currently high, but a large number of buyers are lining up for good deals in the secondary market.
2022 was the most aggressive rate hike year in the last 40 years, with the Federal Reserve making seven rate hikes in response to global inflationary pressures, raising rates by a total of 425 basis points from 0.25% in January 2022 to 4.25% to 4.5%, the highest level in 15 years.
Global stock markets fell in response, as did housing markets in most cities, except for the more unusual ones such as Singapore and Tokyo.
The major investment banks are predicting that the pace of interest rate hikes may decelerate in 2023, and this hike in December 2022, which was expected to be 75 basis points by the market, was eventually slowed to 50, also as a signal.
The current macro situation is still uncertain, and in a later section, we talk specifically about the Singapore property market in 2023.
Macro uncertainty aside, Singapore's fundamentals are strong and the luxury market (large homes in the CCR core) is hugely attractive, as evidenced by the huge rise in the rental market!
A market feature that continues from 2022 is the continued shortage of supply of larger households. The graph comparing rents by household type in section 1.3 shows that large households have risen the most and are the most popular.
According to the 2022 market survey, both owner-occupiers and renters say that 70-80% of people want larger living and spaces that offer all types of activities, such as a home office, when it comes to being budget friendly.
Large homes on the market that offer good value for money will continue to be a popular choice in 2023.