SINGAPORE REAL ESTATE MARKET

TRENDS
AND
PREDICTIONS
2024
FAQ
 01 How do we compare between 2 mortgage package?

The optimal strategy is to opt for FIXED packages, considering that the current
interest rates are approximately in the range of 3.1-3.2%. This approach is
particularly suitable for completed properties. For new launches, the prevailing
trend is to offer flexible rates. In my view, the most straightforward approach is to
target the lowest interest rates and aim for the shortest possible lock-in period.
Additionally, it's advisable to carefully examine the fine print for any hidden costs or
additional charges.

Property market for 3-bedder $1.2M, can still find in North-East

02 region?

When it comes to property hunting, it's becoming increasingly challenging to find

suitable options. If you come across a property that meets the following criteria, it's
advisable to consider it as a priority:

- Minimum size of at least 1,000 square feet.

- Proximity to a nearby MRT station.
- A location with good transaction volume.

In particular, focus on larger projects with a minimum of 300 units.

 Freehold condo at $3-4M or landed at $5-6M? which has a
03 better growth potential? Looking at D9/10/11 or D15.

The most favorable point of entry in the current real estate market is for a
semi-detached property priced between 5-6 million, preferably with freehold (FH)
or 999-year leasehold status. If available, consider properties in District 15 (D15). In
the event that D15 options are limited, look for an intermediate terrace property in
the same district. Additionally, in District 10 (D10), properties with three bedrooms
priced below 4 million offer a good investment opportunity, if such options are
available.

04 Sorry what's the formula for the absorption ratio ?

To determine the sales transaction rate for the period from January to November
2023, we divide the total number of sales transactions during this period by 11
months, and then further divide this result by the number of property listings
available in the market.

What is the future rental yields consider that JB is much

cheaper and people are renting there instead of in Singapore. If
05 the train from singapore reached KL, would singapore rental be
low in demand?

From Melvin's perspective:

"I personally don't place excessive reliance on the presence of a train line when
evaluating real estate investments. Ten years ago, there was a lot of hype
surrounding properties in Iskandar and Medini due to this factor, but many
Singaporeans are still dealing with challenges related to those investments. In my
view, it's prudent to prioritize the Singapore market before venturing into overseas
opportunities. I haven't observed any decrease in rental demand in Singapore, as
the country offers unique factors that set it apart. For a deeper understanding, you
can check out our latest video on YouTube titled “Singapore's 10 USP MOAT”
(Unique Selling Propositions Moat) here."
 The current interest rates are high, but they are expected to decrease
in the coming years.
(1) If I purchase a property now at the high interest rate, will I have
06 the option to refinance at a lower interest rate when it decreases?
(2) If so, How does it work? and what are the principal consideration?
(3) Do PLB have any interest rate forecast?

Melvin's perspective on mortgage financing is as follows:

"Yes, adopting this strategy would indeed be advisable. To begin with, securing a
fixed-rate mortgage at the current rate of 3.1% with a 2-year lock-in period is a
prudent move. After the initial 2-year period, it's a good practice to contact your
bank and refinance based on the prevailing interest rates at that time. You have the
option to either reprice with the same bank or explore the possibility of changing
to a different bank, which is commonly referred to as refinancing.

For completed properties, it's worth noting that interest rates are currently
determined by SORA rates. However, for new property launches, interest rates
typically remain at floating rates, which are currently around 4%. It's important to
acknowledge that making precise interest rate forecasts is challenging, as they are
influenced by movements in the US Federal Reserve rates.

Based on our projections, the Federal Reserve is expected to taper its policies in the
next 12-24 months. During this period, we anticipate a surge in demand in the
Singapore market, as buyers tend to take quick action when interest rates are low,
driven by the Fear of Missing Out (FOMO). Consequently, sellers may capitalize on
this increased demand by raising prices. Please note that this forecast is based on
my own opinion."
 What do you guys think about 19 Nassim? It has a seemingly
07 desirable address, but take up rate is low (maybe due to high
PSF)?

Melvin's insight is as follows:

"Nassim is widely recognized as the pinnacle of luxury in Singapore, particularly

when it comes to condominium addresses. Here, the price per square foot (PSF)
often takes center stage as the key metric, given the premium associated with its
prestigious location and address. The comparatively lower rate of property
acquisition may be attributed to the fact that the property has a 99-year leasehold
status. Historically, this area has been synonymous with freehold properties,
aligning with the preferences of buyers. Consequently, it may require some time for
buyers to become accustomed to the concept of a leasehold property in this highly
sought-after location."

How do condos located in condo enclaves compare to condos

08 nestled within HDB estates? What would be a good basis to
compare them?

Melvin's perspective on real estate investment is as follows:

"My primary criterion for evaluating real estate investments is the volume of
transactions. I closely analyze the volume effect and density levels in various
projects, making comparisons between them. When the goal is to achieve
appreciation, the annual volume of transactions emerges as a critical factor. If a
property experiences too few transactions, it can be challenging for its valuation to
witness substantial growth.

In my view, it's prudent to target projects with more than 300 units that consistently
maintain robust transaction activity throughout the year. A shortage of transactions
in a specific area may signal a lack of demand or a situation where existing
property sellers have limited motivation to sell. Such circumstances can lead to
stagnation in price growth.

Join our consult session for more in-depth insights and comprehensive information
on Singapore's real estate market trends and predictions for 2024, click here to
join.
 09 Where can we find absorption rate for a particular estates?

Our PLB consultants possess a comprehensive research deck containing all the
absorption rates data for properties in Singapore. You can schedule a free
appointment exclusively for webinar participants by visiting the following link here.

Which would have better resale value - Hillview new launch

10 (D23) or fairly new resale near Beauty World (D21)?

Melvin's response: "Definitely Beauty World :)"

Is Singapore housing prices already too high given our prices

11 are now at par or even higher than HK? Any comparison of how
much higher it can go?

It's anticipated that Singapore's real estate market will continue to experience
single-digit growth. This outlook is based on the unique selling proposition (USP)
factors that distinguish Singapore from other markets. For a more in-depth
understanding of these factors, you can watch our latest NOTG video on YouTube
titled “Singapore's 10 USP MOAT” here.
 For potential buyer for resale units, can we enter the market in
12 2024?

Certainly, it's advisable to consider using the PLB Moat analysis framework,
especially since the market is expected to undergo a shift in the near future. You
can refer to the framework and gain insights from the following video link here.

Is there a corelation between Singapore and US interest rate?

How does Singapore interest rate behave when compared to
13 other nation?
Can we use US interest rate as a leading indicator for Singapore
interest rate?

Thank you for sharing the resource, it's a great question asked. For a detailed
explanation of the question, you can watch the video provided at the following link
here.

14 Would you advise to buy new launch condo or resales condo?

To gain a deeper understanding of the key factors to consider when hunting for the
right resale and new launch properties, I encourage viewers to watch the provided
videos at the following links:

1. Why does a condo's transaction volume matter?

2. Cracking the Condo Code 2: Why some 99-year Condos Out-Perform
Freehold Condos in the same Enclave

These videos are likely to provide valuable insights for individuals seeking to make
informed real estate investment decisions.
 Scenario: Mid-late 20s young couple with a few years of
working, both median income, ready to settle down.

Options:
(A) Save up 4-5 more years to buy condo or buy HDB as
15 owner-occupier
(B) Buy HDB next year (co-own) and qualify for grants, but
must pay ABSD if get 2nd property next time.

Which would you choose?

Melvin's suggestion for a real estate investment strategy is as follows:

"I believe that timing is crucial. I recommend considering the following approach:
Start by investing in a resale HDB unit near an MRT station. Keep renovation
expenses minimal and aim to find a unit in reasonable condition. Opt for a single
owner and occupier's name to qualify for the housing grant. Own this HDB
property for a period of 5 years.

After 5 years, you can consider renting out the HDB unit and simultaneously
purchase one condominium. If your income level increases during this time, you
might even contemplate selling the HDB property and acquiring two
condominiums. I've discussed all the advantages and disadvantages of this strategy
in detail in the video.

Please note that the method I suggest carries policy risks and may not work if there
are policy changes. Be sure to read the disclaimers and, if you have any
uncertainties, consult with our consultants for guidance. Cheers!

For a comprehensive understanding of the pros and cons of this strategy, I

recommend watching the following video here.
 16 So now is buyer or seller’s market ?

Melvin's perspective on the real estate market is as follows:

"In 2023, the real estate market is favorable for buyers, characterized as a Buyer's
market. However, in 2024, there's potential for a shift as interest rates in the US
pivot and possibly return to Quantitative Easing (QE) measures. If this occurs, we
may transition back to a Seller's market. During this shift, the Fear of Missing Out
(FOMO) could become a driving force in the market."

Is JB property a good buy? Better to buy condo or landed

17 in JB?

Melvin's perspective on investing in Johor Bahru (JB) and Malaysia is as follows:

"In my opinion, JB offers an almost unlimited supply of properties. It can be an

attractive option as a retirement destination or as a second residence for a lower
cost of living. However, it's important to be aware that selling a property in JB's
resale market can be challenging. Once you make a purchase, understand that it
may be difficult to find buyers in the future.

If you're considering JB, my suggestion is to explore landed properties within gated

communities. In my view, this can be a more secure choice. For condominiums, I
recommend considering properties priced above 1 million Malaysian Ringgit (MYR).
This is because many Malaysians can purchase condos below 500,000 MYR,
which is the true value of many condos in the market.

However, before venturing into the Malaysian market, I recommend exhausting all
your options for Singapore properties first."
 18 What is M2?

M1 Money Supply
This category represents the most liquid form of money, consisting of assets that
are readily available for spending. M1 typically includes:

1. Physical currency (notes and coins) in circulation outside banks.

2. Demand deposits, which are bank account balances that can be withdrawn at
any time without notice (e.g., checking accounts).
3. Other liquid deposits, which can include certain types of savings accounts that
do not have withdrawal restrictions or penalties.

M2 Money Supply
M2 encompasses all the elements within M1 and incorporates additional forms of
money that are less liquid:

1. Savings accounts and time deposits, including certificates of deposit (CDs), that
are below a certain size.
2. Money market accounts, which offer higher interest rates compared to regular
savings accounts but may require higher minimum balances and could have
transaction restrictions.
3. Other near money, which refers to assets that can be quickly converted into cash
or checking deposits.

M3 Money Supply
M3 represents the broadest category of money supply and encompasses
everything in M2 while also including less liquid forms of money:

1. Large time deposits in banks, typically certificates of deposit above a certain size.
2. Money market funds that are not covered by M2.
3. Certain types of institutional money market funds.
4. Other larger liquid assets that are not as readily accessible as those in M1 or M2.

These distinctions within the money supply categories help economists and
policymakers analyze and understand the different levels of liquidity and financial
assets in an economy.
 With the MOAT 10th point, grant from government for HDB. The
"fund injection" will only be released after MOP and owner sell
their flat. With Prime and Plus, how it will affects the private
19 property market. Although I understand it will only impact it
some where 14-15 years, it will current private property
decision. Thanks for your insight in advance.

Over the years, the injection of funds through HDB grants and BTO subsidies has
provided substantial and ongoing support to the Singapore residential market. This
support becomes particularly evident when HDB homeowners decide to exit their
HDB properties and utilize their CPF funds to purchase condominiums or other
residential properties. This dynamic highlights the significant role these financial
incentives play in shaping the real estate landscape in Singapore.
 Which type of property is the most suitable for first-time home
buyers in 2024? Our budget is $900K.

We are conflicted amongst these options:

1) Resale HDB (however $$$, not sure whether price will
20 depreciate)
2) BTO + rent (however renting for 4-5 years is $$$ and not
preferred)
3) Condo (most $$$, small, but price might appreciate).

Would appreciate some advice. Thanks!

Here's a summarized version of Melvin's advice for various housing options in

Singapore:

1. Resale HDB: Don't rely on them for appreciation. Consider purchasing one with
the idea of using it as a rental property in the future, especially if you follow the 1
owner + 1 occupier method. You can watch a video for more details [insert link].

2. BTO (Built-to-Order): Opt for standard types with a 5-year Minimum

Occupation Period (MOP). If this isn't feasible, consider resale HDB units near MRT
stations. If possible, try to live with your parents instead of renting, as rental
expenses can significantly impact your finances.

3. Condos at $900K: Be cautious, as you might mostly find 1-bedder units at this
price point. These units tend to have oversupply issues and may not perform well
in terms of capital appreciation over the medium term.

Based on your situation, Melvin suggests considering Option 1 with a grant, where
one person owns the property and another occupies it. After 5 years, you can
either sell the HDB and buy a condo or keep the HDB and rent it out while
purchasing a condo. However, please be aware that this strategy carries policy risks
and may not work if there are policy changes. Be sure to read the disclaimers and
consult with their consultants for further guidance.

For a more detailed explanation of the pros and cons, you can watch the video
here.
 21 Should I sell my condo after 10 years or hold it for rental?

Exploring the option of switching to a better-performing property is a strategic

approach when your current condo fails to appreciate in terms of capital gain. This
decision is influenced by several factors, including changes in the rental yield
landscape in Singapore.

The rationale behind considering a switch is that with the current low rental yields,
the opportunity cost of holding a property that doesn't appreciate significantly
becomes increasingly high. However, the feasibility of making this switch also
depends on various personal factors, such as your life stage, age, and income as it
relates to the Total Debt Servicing Ratio (TDSR) for a replacement home.

For some property owners, paying off their property and generating rental income
through yields makes sense. On the other hand, if a property hasn't appreciated
over an extended period, the capital tied up in that property may be better utilized
through equity term arrangements or by selling it and reinvesting in a more
promising property.

It's important to note that every scenario is unique, and there isn't a one-size-fits-all
solution. Whether to sell or not depends on various individual circumstances and
objectives. Sometimes, not selling might be the more advantageous option, while
in other cases, selling and reinvesting could lead to better opportunities. It's crucial
to carefully assess your specific situation and goals before making a decision.
 Were there more rental transactions in 2023 compared to home
22 sales, since you mentioned that the overall transaction is lowest
since 2019?

150,000

125,000

150,000

75,000

50,000

25,000

2016 2017 2018 2019 2020 2021 2022 2023 2024

Rental Transaction Volume Sale Transaction Volume

There will always be more rental transactions than home sales, due to the nature of
our real estate market. The ratio is typically around 4:1; for 2023, there are 73,398
rental transactions versus 20,152 sale transactions for the condo and apartment
segment. If you refer to the chart below, you will see that the sale transaction
volume for condos and apartments is the lowest since 2019, and overall rental
transaction is the lowest since 2016 — a result of the large supply of TOP condos
entering the market.
 Does it mean that condo at CCR has no potential for capital
23 appreciation and should be disposed of?

There’s no one-size-fits-all answer to this question, since every property is different.

There are properties that have not seen capital appreciation but possess excellent
rental demand and yields, which allows investors to continue enjoying passive
income or to pay off their existing mortgage. Therefore, we recommend doing
thorough research and analysis of specific projects before making a decision for
your property portfolio. If you require any guidance, do reach out to us for a tailored
consultation!

Thank you for taking part in our PLB Webinar

and we hope you had an insightful time.

If you like to have more of your personal questions answered, you

can read more of our articles here. If you are more of a visual
person, you can follow our Nuggets On The Go (NOTG) series on
YouTube in the link here. Alternatively, you can have a more
personalised experience by speaking to our consultants. You can
reach out to us directly here.