Disclaimer: Unless otherwise stated, any opinions expressed below belong solely to the author. Forecasts sourced from DBS report Singapore 2040: The Next 15 Years of Quality and Inclusive Growth.
The DBS 15-year research report, parts of which I covered in the article about the Singapore dollar reaching parity with the USD a few days ago, contains other predictions about the country’s economy, including the trajectory of its property market.
DBS analysts expect construction of 200,000 to 300,000 new apartments over the next 15 years (or even close to 320,000, as shown in the chart below), both in the public and private sectors, to accommodate a future population of 6.9 million.
“Singapore’s property market is anchored by population growth, urban rejuvenation, and decentralisation.”
One of the drivers of this housing boom is the shifting household structure, with fewer people living under the same roof. In fact, as I observed two months ago, even if Singapore’s population ground to a halt, the country would need hundreds of thousands of flats in the future, as both the elderly and the young prefer to live on their own these days.
About half or more of the new supply should come from the redevelopment of the Paya Lebar Air Base, which will undergo gradual decommissioning from 2030 onward.
New housing projects
The new district could yield a total of over 150,000 new homes, but there are tens of thousands more coming in other locations.
The grounds of the former Bukit Timah Race Course are finally making way for up to 20,000 new apartments, with its twin in Kranji set to have another 14,000 built next year. Another 10,000 or so are expected on the sites of the Keppel Golf Course, the Sembawang Shipyard, which is set to cease operations in 2028, and the prime location at Marina South.
| Housing Area | Est. no. of new homes |
|---|---|
| Paya Lebar Air Base-Defu | 150,000 |
| Bukit Timah Turf City | 15,000 – 20,000 |
| Former Singapore Racecourse site at Kranji | 14,000 |
| Marina South | 10,000 |
| Sembawang Shipyard | 10,000 |
| Former Keppel Golf Course | 9,000 |
| Mount Pleasant | 6,000 |
| Pearl’s Hill | 6,000 |
| Dover-Medway (Phase 1) | 6,000 |
| Mediapolis | 5,000 |
| Newton | 5,000 |
| Paterson | 1,000 |
Prices expected to rise, but…
DBS predicts property prices to grow an average of 2 to 3% annually over the 15-year period. This means that by 2040, we can expect them to be anywhere between 35 and 55% higher than today.
It has to be noted, though, that in its report, DBS does not distinguish between private and public housing prices, and while they are somewhat correlated, the relationship is not 1:1.
HDB is under considerable control of the government, and the entry costs for new home buyers lining up to take advantage of the BTO system remain low in comparison to the resale market.
There are also potential risks, as noted by the researchers:
“We believe that population growth, economic vibrancy, and governmental stability are the three anchors driving sustainable growth in Singapore’s property market. A weakening of any one of these could disrupt or drive a correction in prices.”
Nevertheless, some inflation is to be expected, given that Singaporeans increasingly opt to live on their own rather than in multigenerational homes and are willing to make the investment.
Fortunately, besides enduring, strong demand, another cause for rising prices is found in the increasing incomes of Singaporeans, with the monthly median expected to cross the S$7000 mark in the late 2030s.
The only way is up
With the economy predicted to double in size—as Singapore is expected to join the US$1 trillion GDP club in the next decade—as well as growing incomes, new infrastructural developments, continued increase in population, and the highly restricted supply of land, the property market is set to continue its upward path.
Barring some catastrophic, extraordinary circumstances, there doesn’t seem to be a major threat to this growth trajectory.
What is more, as everything around grows, so do people’s incomes, keeping homes affordable enough for most Singaporeans.
Featured Image Credit: Paya Lebar Air Base redevelopment concept/ Urban Redevelopment Authority
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