Singapore Property Market Risks

This hesitancy is rooted in affordability. Buyers, particularly HDB upgraders who form the bedrock of demand, are no longer just looking at the monthly mortgage; they are stress-testing their finances against potential economic headwinds and the reality that borrowing costs remain significantly higher than they were just three years ago. The Total Debt Servicing Ratio (TDSR) framework acts as a firm guardrail, preventing over-leveraging and forcing a level of financial prudence that tempers market exuberance.

Consequently, developers are being forced to adapt their strategies. The trend towards smaller, more quantum-friendly units continues unabated, allowing them to keep headline prices for one- and two-bedroom units within a palatable range for a larger pool of buyers. This strategic downsizing ensures projects remain accessible, even as the per-square-foot (psf) price continues its gradual ascent.

For a SGD 1 million loan over 30 years, the difference between a 1.5% and a 3.7% interest rate is over SGD 1,100 in monthly payments. This is not a trivial sum; it directly impacts household cash flow, savings potential, and overall investment capacity. Buyers who have been on the sidelines waiting for rates to fall are now confronting the possibility that these higher rates may be the new normal for the foreseeable future, forcing them to either adjust their budget downwards or delay their purchase plans.

In stark contrast, the Core Central Region (CCR) remains in a state of muted activity. The 60% Additional Buyer's Stamp Duty (ABSD) imposed on foreign buyers has effectively frozen a significant portion of investment demand for luxury properties. While transactions still occur, they are largely driven by high-net-worth locals or foreigners who have already attained Permanent Resident status. This has led to a build-up of unsold inventory in the prime districts, giving well-capitalized buyers a rare upper hand in negotiations.

This bifurcation highlights a critical trend: Singapore's property market is now overwhelmingly a domestic affair. The policies enacted to ensure housing affordability for citizens have successfully re-engineered demand, placing the aspirations and financial capacity of local buyers at the very center of the market's trajectory. Developers in the CCR are now forced to rethink their product offerings, potentially pivoting towards smaller luxury units or integrated developments that appeal more to local owner-occupiers than to foreign investors.

This expanding inventory is already influencing developer strategy and buyer psychology. With more projects competing for the attention of a cautious buyer pool, developers are becoming more measured with their launch pricing and are more inclined to offer incentives to secure early-stage sales. For buyers, this translates into greater bargaining power and the luxury of time to conduct thorough due diligence, reinforcing the market's shift from a seller's to a more balanced, value-conscious environment.

For prospective buyers, this environment demands a strategic and unemotional approach. The fear of missing out has been replaced by the prudence of not overextending. Actionable insight must be tailored to specific goals. For HDB upgraders, the key is to meticulously calculate affordability based on current interest rates, not hopeful future cuts, and to compare the value proposition of a new launch against a similarly located resale property, where price appreciation may have moderated.

​First-time buyers should expand their search beyond heavily marketed launches and explore the resale market, where the absence of launch-day hype can create more favorable negotiating conditions. For the small pool of investors still active, the focus must shift from rapid capital appreciation to sustainable rental yield. With borrowing costs high, a thorough cash flow analysis is non-negotiable to ensure the investment remains viable through different economic cycles. Ultimately, the winners in this new phase of Singapore's property market will not be those who act the fastest, but those who plan the most diligently.