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Almost half of all condos sold in Singapore are mass market condos, making them the most frequently traded kind of private property. As a result, the dynamics and price movement of the private housing market as a whole are heavily influenced by this sector.
Condominiums catering to the general public are defined in this research as any private residential non-landed properties outside of the Central Region, with the exception of executive condos (OCR). Condominium communities may have amenities including private security, parking garages, landscaping, outdoor gathering spaces, swimming pools, fitness centers, and other entertainment venues.
Observe the Price Movement
Private property prices fell for four years, from 2013 to 2017, before beginning to rise again in the third quarter of 2017. Private non-landed residential property prices in OCR have climbed by 39.8 percent over the previous five years, which is higher than the island-wide average growth rate of 34.3 percent. From late 2021 to the third quarter of 2022, the OCR condo market had particularly strong price growth, which was fueled in part by the ongoing increase in HDB resale flat prices.
When the value of public housing rises, some HDB owners cash in by selling their apartments and buying more expensive private homes. The HDB resale house price index has grown by a solid 30.7% over the previous three years. Condominiums aimed at the mass market are the property most sought after by HDB upgraders.
The government’s cooling measures in September 2022 dampened the condo market, and the OCR non-landed housing price index fell 2.6% from the previous quarter to the fourth quarter of 2022.
A Changing Tendency in Rentals
Non-landed residential property rents have climbed at a quicker rate than prices during the previous five years. Compared to the price index of private non-landed housing, which increased by 34.3% between Q4 2017 and Q4 2022, the rental index for private non-landed housing increased by 45.2%.
The rental index for non-landed homes in the OCR has increased by 55.9 percent over the last five years, which is the highest rate of rise. This is a bonanza for condo owners in the suburbs, but a problem for their renters.
Investors looking to take advantage of historically high rental rates have boosted the demand for residential properties.
Industry Scope
The mass market segment has continuously been the biggest sector among the three private non-landed property market categories in terms of the number of dwelling units traded during the previous 19 years. This is mostly due to the fact that four out of Singapore’s five regions fall under the OCR, making it the biggest of the three market groups. Occupying the most land area is the Outer Coastal Region (OCR), which is comprised of the four other regions and includes the Central Region (CCR) and the Rest of Central Region (RCR).
It’s also worth noting that the bulk of the government-sold residential construction lands during the previous decade may be found in the OCR. The public sector is the primary land developer vendor. Numerous suburban condominium developments with more than 300 units are constructed on land acquired under the government’s Land Sales program. Hence, there has been an increase in the number of sales of condos in the suburbs.
Purchasers’ Demographics
Condos in the suburbs are a popular choice among HDB upgraders since they cost less than single-family homes in the same area. The percentage of purchasers having HDB addresses in the private housing market in 2022 was the lowest in the top CCR segment, at 17.8 percent. Yet, there is a greater percentage of purchasers with HDB addresses purchasing condos in the RCR.
More than half of OCR condo purchasers already reside in private property, but 45% of mass-market condo buyers are HDB upgraders. This contradicts the widely held belief that most OCR private home purchasers are HDB upgraders.
HDB upgraders like mass-market condos because they are the cheapest option in the private housing market. In 2022, the main market transactions for a typical three-bedroom apartment range from S$1.23 million to S$2.6 million. These condos range in price from around S$1,200 psf to about S$2,323 psf on a per square foot (psf) basis, whereas condos of comparable size in the CCR and RCR go for about S$1,633 psf to about S$3,830 psf.
Another consideration for purchasers with HDB addresses is the comfort level they’ll have with their new neighbors and community if they purchase a condo in the same or adjacent HDB town. Evidence of this trend is the rapid adoption of 2018’s OCR market debuts.
In Summary
Condos for the mass market are designed to accommodate the desires of HDB flat owners who are looking to upgrade. Strong market fundamentals, including as demand from HDB upgraders and investors, spurred by growing HDB resale prices and median family income, underpin the demand and pricing of such condos.
In 2023, the market should see the introduction of about 30–40 new private home developments. Around a third of the private homes in these communities are situated in the OCR. This might prevent an oversupply of new private homes in the OCR while yet meeting the demand for it.
