4 Things to Know Before Buying Your First Private Property in Singapore

The recent Urban Redevelopment Authority (URA) flash estimates have revealed that private housing prices declined in 3rd Quarter 2024 for the first time since 2nd Quarter 2023, by 0.7%”.’

Considering the prior quarter had witnessed a “the first three quarters of 2024, the overall private housing prices increased by 1.6%, a significant moderation from the 3.9% gain over the same period in 2023”, this sudden dip in prices can potentially draw homebuyers and property investors’ attention, especially from those who are looking for the right time to buy a private property in Singapore.

1. Singapore Private Home Property Price Index

Home ownership in Singapore has become increasingly expensive and with the economy still struggling to get back on track, many potential home buyers are taking a wait-and-see approach instead of making hasty purchases. With fewer eager buyers, sellers' negotiating power naturally took a hit.

Another subtle factor is the promise of nearly 100,000 new homes, both private and public housing, that are being rolled out between 2023 and 2025.

Highest private property supply

Reportedly, private housing supply is around 11,110 units via the GLS Programme in 2024 (highest since 2013!) and this is the highest number in a decade. By ramping up housing supply and home ownership opportunities in Singapore, the prices seem to soften in tandem.

Increased ABSD in April 2023

The additional round of Additional Buyer’s Stamp Duty (ABSD) adjustment on 26 April 2023 was another clear sign that the government is making a resolute effort to keep the local property market sustainable.

The rates are adjusted at all levels but the significant increase of ABSD for foreign buyers from 35% to 65% clearly points to the attempt to keep overseas property investors at arm’s length so that Singapore private property prices can remain affordable for locals.

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2. Lesser HDB Upgraders

In Singapore, HDB upgraders make up a large portion of private property buyers in Singapore. With the HDB Resale Price Index showing no sign of slowing down, the potential for this pool of buyers to fetch higher proceeds from their HDB flat sale to fund their private home purchases remain relatively high for the year.

However, there are 20,940 units of HDB BTO flats reaching their Minimum Occupancy Period (MOP) in 2024. This also points to the fact that there is a much smaller pool of HDB upgraders to fuel the price growth in the private home sector in 2024 and 2025.

However, it is safe to say that the Singapore property market has been a resilient one for the past many decades. Coupling that with the low unemployment rate and rising median monthly household income, it is still possible to expect a growth in private home prices in Singapore in the near future.

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3. How much do I need to buy private property?

If you are ready to purchase your first private property, the first step is to assess the affordability based on a thorough calculation of your cash-on-hand, amount of Central Provident Fund (CPF) available in your Ordinary Account (OA), any existing loans that may affect your Total Debt Servicing Ratio (TDSR) and your monthly income to support the home loan repayment.

Private Property Down Payment: 25%

Let’s assume you are a Singaporean buying your first property in Singapore, which is a $1 million condo. Your financial calculation should include 25% in down payment, in which 5% must be paid in cash and the remaining 20% can be funded by cash or CPF OA.

The down payment breakdown will look something like this:

4. How much home loan can you take?

Next, you have to assess if your TDSR and monthly income qualify you for the mortgage loan to cover the remaining 75% of the purchase price.

Private property maximum 35 year loan

Do note that the maximum loan tenure is 35 years for private properties in Singapore. The longer you stretch your tenure, the more interest you will pay, on the other hand, shorter tenure will mean that your monthly repayment sum will be much higher.

Finally, you have to ensure your new home loan is within your TDSR. This framework implemented by the Monetary Authority of Singapore (MAS) allows you to utilise only up to 55% of your gross monthly income to service your total debt obligations.

So, if your current salary is $8,000 per month, your maximum monthly debt repayment limit is $4,400 ($8,000 x 55%). If you are taking out a home loan on top of any existing loans, you must ensure that your total monthly loan repayments must not exceed $4,400.

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This article was first published in Value Champion in July 2023, edited for information accuracy and relevance.