What to expect in Singapore’s residential property market in 2025

The Property Price Index is projected to grow by 1% to 2% this year.

The Singapore residential property market is expected to see property prices stabilise in 2025, with the Property Price Index (PPI) projected to grow by 1 to 2%, aligning closely with inflation. This moderation comes after years of stronger growth, including a 3.9% rise in 2024 and 6.8% in 2023, a report by DBS said.

DBS notes that the economy and employment are the two largest drivers of property buyer sentiment. In their view, Singapore expects a GDP growth of 2.8% YoY, the upper end of the Ministry of Trade and Industry’s forecast range of 1% to 3%. In addition, the unemployment rate will remain stable between 2.6% to 2.6%, sustaining the property market.

Additionally, after the Fed has cut interest rates by 100bps since September last year, DBS said it expects the overall interest rate environment to be more conducive for prospective homebuyers, bolstering affordability.  

However, DBS cautioned of potential uncertainties arising from the tariffs by the Trump administration.

New households and upgraders are  key buyers

DBS also noted that a key demand driver is the new household formation. Citing data from SingStat, new household formation has been growing at an average rate of 1.5% per annum over the past five years, translating to an annual demand of close to 20,000 homes.

Whilst the government has made efforts to meet this strong demand by increasing the supply of HDB flats in recent years, some households may still need to turn to the public resale or private property markets. This may be due to various factors, such as ineligibility for Build-to-Order (BTO) flats, often because buyers’ income exceeds the $14k household income ceiling, and the inability to secure a flat.

DBS analysed the number of marriages as a proxy for household formation, which averaged 27,000 annually over the past five years, outpacing the number of new households formed.

This discrepancy may be attributed to young couples continuing to live with their parents after marriage. Nonetheless, home ownership remains highly valued in Singapore, and the desire to own a personal home is strong. As such, we expect demand for private homes to remain resilient in 2025, supported by historical average levels of household formation.

DBS also expects upgraders to be the core pool of buyers in 2025 as many in Singapore view private property as an aspirational asset class, and with homeownership rates extremely high, at close to 90%, demand from upgraders plays a crucial role in driving new home sales.

These upgraders are typically households that have made gains from the sale of their first public home (HDB) and have accumulated savings, which they use for the downpayment on private property. Over 100,000 flats are estimated to reach their Minimum Occupation Period (MOP) between 2019 and 2023, expanding the pool of potential buyers for upcoming new launches.

Furthermore, household incomes have risen over the years, with an increasing number of households now earning above $20k per month, suggesting that more people may be able to afford private property.

Meanwhile, demand for Singapore real estate from foreigners will stay muted as long as the 60% Additional Buyer’s Stamp Duty (ABSD) rate is in place. This is expected to primarily affect the CCR, where foreigners traditionally accounted for approximately 10% or more of total transactions, and to a smaller extent, the RCR, where foreigner participation has historically been around 5% to 10%.