Private Residential Market Outlook: Trends and Projections for 2025

1.      What are the projected trends for sales and rental transaction volumes and prices in 2025 compared to 2024?

For 2024, the total number of new sales is expected to be slightly over 6,000 units, which is close to the 6,400 units sold in 2023. For 2025, we expect new sales to reach approximately 10,000 units. As for the resale market, we anticipate around 14,000 transactions in 2024, with this number potentially rising to 15,000 units in 2025 as the new sales market heats up.

We believe that 2024 may end with much stronger resale numbers than new sale numbers. This is because there have been few new launches, and given that demand tends to chase supply, lower new releases would translate to fewer transactions. As demand for new sales begins to heat up, prices for both new and resale units are expected to rise. For new sale prices, we anticipate a wide range of movement, from -1% to +7%. The -1% decline could occur if the authorities implement draconian cooling measures in the private market. However, even if they attempt to curb the HDB resale price increase, the higher base values already set for existing HDB flats would make it easier for buyers to upgrade to private properties.

On the other hand, a +7% increase may materialise if developers stagger their launches, setting new benchmarks by first selling projects with unique selling points or those in locations where there have been no major new sales in recent years. This could revalue the pricing landscape, making projects with less unique selling points appear "affordable," even if they set new records for their respective areas.

For rents, we believe that they may head sideways in 2025 as businesses continue to meet challenging conditions and attempt to contain the number of foreigners being hired here. However, as rents have fallen in 2024, employment pass holders who had signed leases for HDB flats in 2023, or who had decided to share private units with others, may now find it affordable to sign a personal lease in a private unit. This positive may offset the negative factors, and with higher annual values, landlords may resist lowering rents, thereby leaving rents unchanged for the year.

2.      Who are the key tenant and buyer profiles driving demand in 2025?

We expect to see more of the same tenant profiles in 2025. There will be families who have purchased private properties under construction and may wish to lock in their HDB or property values by selling their current property and renting a place. Employment pass holders who arrived in 2023 and found private apartment rents beyond their budget. These tenants sought accommodation in HDB flats, rented rooms in private units, or stayed in co-living spaces. They may decide to move out of their current accommodation and sign a personal lease.

For buyers, we expect more baby boomers purchasing for investment or using their equity as a down payment for their children. There will also be more HDB upgraders due to the narrowing price gap between the public and private segments.

3.      What are the expectations for supply and demand dynamics in the private residential market in 2025?

For 2025, we may see a wide range of new supply numbers, depending on how developers decide to strategize their launches. On the lower end, we may have about 9,000 units (excluding ECs), and if all projects that can be launched in 2025 take place, we may see about 11,000 units. Demand is expected to follow suit as it tends to chase supply.

According to URA's statistics on project completions, about 5,300 units are expected to be completed in 2025, compared to about 9,000 units in 2024.

Source: URA, Savills Research & Consultancy

4.      How are global economic factors and interest rate trends expected to influence property prices and demand in 2025?

For 2025, interest rates are expected to continue to weaken, although not as much as initially anticipated in Q3/2024. Nevertheless, they are still expected to soften, which may improve mortgage payment affordability. Although the economy is expected to grow, conditions will remain challenging for businesses. However, with more private residential buyers increasingly tapping into their parents' savings, the large liquidity pool from baby boomers could help offset near-term economic headwinds. Additionally, rising HDB resale prices have narrowed the gap between the public and private markets, making it easier for people to upgrade.