First of all, it is true that the past two years have seen phenomenal rises.

The epidemic was a watershed, and from 2017 to Q2 2020, the property market has been in a steady growth phase, increasing by roughly 2-3% per year.

However, between the second quarter of 2020 and the third quarter of 2022, prices climbed rapidly, rising by 23.47%, an average increase of over 10% per year. This has far outstripped the growth in income levels of the population.

Secondly, the economic picture for next year is not promising.

Although the Singapore economy has had a very bright performance this year, there is still uncertainty when looking towards 2023.

Thirdly, the housing supply in the market is gradually recovering.

2023 will see the peak of new project delivery with an estimated 14,801 units.

At the same time there will be roughly 45 new openings/12,000 units in 2023, a significant improvement on the 15 units/5,000 units in 2021.

Fourthly, interest rates are high and will continue to be so.

High interest rates have become the biggest concern for local homebuyers.

The market predicts that the Fed rate will reach its highest point, 4.75%, by the end of 2023. This means that mortgage rates will remain in an upward trend throughout 2023, although the magnitude will slow down.

If the banks can come up with some long-term fixed rate packages below 4% next, it can greatly ease buyers' anxiety.

Fifth, sales volumes are down.

Private term home sales fell by 17.3%, from 312 in October to 259 in November, an 83.3% drop in year-on-year private term home sales.

The situation may improve next year as many new projects will be launched for sale.

So house prices will still cool down in 2023, but the cooling is not to say that prices are going down, but just that they are going up less. After all, it is still a rental market with high rents and still strong demand.

Overall: house prices are expected to rise by 3-5% in 2023, with the sellers' market weakening, high premium properties becoming harder to resell, and buyers being able to have more reasonably priced options, but the rental market remaining a landlord-driven situation.