Price-sensitive homebuyers become cautious due to inflation

Increasing borrowing costs and economic uncertainties contribute to this.

Amidst increasing borrowing prices and macroeconomic woes, price-sensitive homebuyers, especially those in the mass market homes, may get cautious and use their money for household expenses, Knight Frank said.

But the demand for prime non-landed residences would remain strong as luxury homebuyers, who are less dependent on debt financing, are more willing to pay for readily available family-sized units for their jobs or for their children studying in Singapore. 

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The core central region would likely be their targeted region as the costs of the home have not risen as much as the rest of the island in the last three years.

“As such, prices in the prime segment would likely increase whilst price growth in the mass market may begin to taper off with the exception of new launches, resulting in a possible two-tier market emerging in the coming months,” said Knight Frank.

Private home prices are seen to increase 5% to 7% for the whole year, “less than the 8.6% growth in 2022, with overall sales transactions ranging between 17,000 to 20,000, some 8% to 22% down from the 21,881 sales in 2022.”