What's fuelling Singapore's private housing demand?

Yahoo

25-03-2025

February saw the highest developer sales for the month in 13 years (Photo: Samuel Isaac Chua/EdgeProp Singapore)
Singapore grants citizenship to about 22,000 individuals annually, said Senior Minister Lee Hsien Loong at the Teck Ghee Citizenship Ceremony on March 9. 'Immigration is essential — even existential — for Singapore's survival,' he emphasised.
CHART: SINGAPORE DEPARTMENT OF STATISTICS, SKY SEAH OF NUS BUSINESS SCHOOL, DEPARTMENT OF REAL ESTATE
Amid the strong housing demand witnessed since late last year, a key question arises: Are new citizens contributing to this surge? According to Wong Xian Yang, head of research for Singapore and Southeast Asia at Cushman & Wakefield, foreigners must first obtain Singapore permanent resident (PR) status and hold it for at least two years before becoming eligible for citizenship.
Currently, Singapore PRs pay an additional buyer's stamp duty (ABSD) of 5% when purchasing their first home. 'The ABSD of 5% is relatively manageable,' says Wong. He believes that most PRs intending to buy a home would have done so upon obtaining PR status rather than waiting to secure citizenship — unless they plan to purchase a landed property, which is restricted to Singapore citizens.
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Singaporeans accounted for 92.4% of new home buyers, PRs made up 6.9%, and foreigners recorded just 11 transactions (0.7%) in February (Photo: Hong Leong Holdings)
February saw the highest developer sales for the month in 13 years, notes Tricia Song, CBRE head of research for Singapore and Southeast Asia.
Singaporeans accounted for 92.4% of new home buyers, PRs made up 6.9%, and foreigners recorded just 11 transactions (0.7%), according to Lee Sze Teck, senior director of data analytics at Huttons Asia.
Lee also noted that the combined new home sales for the first two months of this year — totalling 2,658 units — marked the strongest start-of-the-year sales since 2013.
'Robust local demand remains a key driver of Singapore's resilient housing market,' says Chia Siew Chuin, head of residential research at JLL Singapore.
Chia attributes this strong demand to local buyers' preference for homeownership. 'Singapore's cultural emphasis on owning property, coupled with the widespread perception of real estate as a reliable long-term store of value, reinforces this demand — even amid global market fluctuations,' she explains.
According to the Department of Statistics, Singapore's homeownership rate rose to 90.8% in 2024, up from 89.7% the previous year. Meanwhile, the proportion of HDB dwellers declined slightly from 77.8% in 2023 to 77.4% in 2024, reflecting a trend of more residents upgrading from public housing to private property.
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CHARTS: SINGAPORE DEPARTMENT OF STATISTICS, SKY SEAH OF NUS BUSINESS SCHOOL, DEPARTMENT OF REAL ESTATE
'Household growth reflects housing demand, driven by adult population growth or rising headship rates,' says Sky Seah, a senior lecturer in the Department of Real Estate at the National University of Singapore (NUS) Business School.
According to Seah, the annual growth in the number of households — also known as net household formation — serves as an indicator of overall housing demand. Between 2009 and 2024, net household formation fluctuated significantly, ranging from as low as 200 households per year to as high as 47,100. 'However, on average, the y-o-y percentage change in household formation stands at about 1.85%,' she estimates.
Data from the Department of Statistics shows that the number of new citizens in Singapore was about 25,200 in 2024, a slight increase from 23,472 in the previous year. In 2022, the figure stood at 23,082. Over the past 16 years, the number of new citizens has remained relatively stable.
Meanwhile, the number of new permanent residents (PRs) was about 35,000 in 2024, similar to the 34,500 recorded in both 2023 and 2022. Apart from a pandemic-related dip to 27,470 in 2020, the annual number of new PRs ranged between 29,850 and 33,435 from 2012 to 2021.In contrast, Singapore's adult resident population — defined as residents aged 20 and above — has shown a greater variation, ranging from a high of 74,754 in 2009 to a low of about 30,000 in 2020. 'If we exclude the pandemic's impact in 2021, post-pandemic adult population growth has mainly come from non-residents,' says Seah. 'This is likely the key driver of rising rental demand and increased interest from property investors.'Another indicator of housing demand is the 'headship rate' — the proportion of adults who head their own households. This metric reflects the choices adults make, such as establishing their own households, living with roommates or remaining with their families.
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Over the years, the headship rate has fluctuated between 39% and just over 43%. While the headship rate has been steadily increasing since 2012, it has plateaued since 2020, hovering at an average of 42.5%, notes Seah.
When broken down by age group, the headship rate for adults under 35 and aged 35 to 49 has declined for the past three years, notes Seah.In contrast, the most significant increase has been among individuals aged 65 and above, where the proportion of those heading their own households has risen to 52% — or one in every two households, according to Seah.
These ageing households contributed to strong housing demand, influenced by independent living, returning grown children, and asset-rich seniors adjusting their housing needs, Seah observes.
'With high homeownership rates, older individuals may tap into real estate equity, shaping future housing trends,' she says. 'Their growing role underscores long-term housing demand shifts.'If population growth is primarily driven by an increase in the non-resident population — and given that foreigners are subject to a 60% ABSD — this would likely lead to stronger demand for rental housing, at least in the short term.
Despite the recent increase in housing supply, which has softened rents, the demand for housing as an investment asset remains strong, says Seah.
Over the past 20 years, household formation in Singapore has remained relatively stable. However, housing demand is also influenced by other factors such as unemployment levels, salaries, government subsidies, inflation rate, economic growth and mortgage rates.
Singapore's unemployment rate has remained low, fluctuating between 2% and 3% over the past decade, Seah notes. While median household income has steadily increased, inflation and mortgage rates are projected to trend downward globally.
She adds that the declining headship rates among younger households may indicate growing affordability challenges for millennials.
Meanwhile, 'asset-rich older households may continue to fuel market demand and exert considerable influence', Seah adds.
Homebuying demand in the CCR is now predominantly driven by affluent locals and PRs who continue to see value in owning such properties (Photo: Samuel Isaac Chua/EdgeProp Singapore)
JLL's Chia highlights that the persistent rise in housing prices remains a major concern, with affordability continuing to be a pressing issue for many buyers. 'The government's focus on market stability and affordability could lead to the introduction of cooling measures if prices rise too rapidly, which would impact overall sales activity and price trends,' she warns.
While many new project launches in early 2025 were in the Outside Central Region (OCR) and are almost sold out, sales momentum may slow in the latter half of the year, Cushman & Wakefield's Wong notes. This is because the project launch pipeline is shifting toward more developments in the Rest of Central Region (RCR) and Core Central Region (CCR), where prices tend to be higher, he observes.
'Although underlying demand for private homes remains steady, supported by low unemployment rates and healthy household balance sheets, persistent high interest rates and global economic uncertainty are likely to moderate demand,' says Wong. 'However, projects that offer strong value — whether through attractive pricing or prime locations — are expected to continue performing well.'
At the same time, the CCR is facing distinct challenges following the implementation of the 60% ABSD for foreign buyers in April 2023. Prior to these measures, foreign buyers accounted for 15.8% of CCR non-landed sales transactions in 1Q2023, JLL's Chia notes. However, following the new regulations, foreign participation dropped dramatically, hovering between just 3.7% and 6.6% per quarter in 2024.
'Consequently, homebuying demand in the CCR is now predominantly driven by affluent locals and PRs who continue to see value in owning such properties,' she says.
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