When the Tide Recedes - Who Will Be the Property Market’s Last Buyer?

When the Tide Recedes, Who Will Be the Property Market’s Last Buyer?

当潮水退去 谁是楼市接盘侠？

https://www.zaobao.com.sg/finance/singapore/story20250803-7247124?utm_source=android-share&utm_medium=app

Translated by ChatGPT 

2025-08-03

By Zhou Wenlong (周文龙）

Lianhe Zaobao 

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In Singapore, if you ask what things “only go up, never down,” you’ll likely hear answers like: oil prices, electricity bills, coffee, rent, labour costs… and probably private home prices.

Despite global market uncertainty caused by U.S. tariff policies, private home prices continued to rise last quarter. According to data released by the Urban Redevelopment Authority last Friday (July 25), overall private residential prices rose 1% quarter-on-quarter, slightly higher than the 0.8% increase in the previous quarter.

Analysts say that as more new projects are launched, private home prices are expected to rise further this year, possibly between 3% and 5%.

Private home prices up 53% in eight years—the longest bull run in history

Private home prices began rebounding in 2017 and have been rising for eight consecutive years, with a total increase of 53%—a staggering figure and likely the longest uptrend in the history of Singapore’s private property market.

What surprised me more was the government's announcement on July 3 to revise Seller’s Stamp Duty (SSD) rates and holding period rules—a move aimed at curbing speculation. One would have expected this to slow the market and prompt a wait-and-see attitude among developers and buyers. However, just a week after the measure was introduced, the tender for a private residential site at Pine Grove still attracted seven bids. The winning bid translated to a land price of $1,376 per square foot per plot ratio—second highest ever for an Outside Central Region (OCR) site, only slightly below the record $1,388 psf for a Bayshore Road plot.

Related Reading:

Off-season effect limited: June non-landed resale transactions down only 0.2%

Private home prices up 1% in Q2; full-year increase may reach 5%

Sales of new launches over the past month have also been strong. For example, Lynden Woods—the first private housing project in Science Park—sold 94% of its units on launch day, the highest launch-day sales rate this year. Two high-end projects, UpperHouse@Orchard Boulevard and The Robertson Opus, launched over the weekend at an average price of about $3,360 psf and sold more than 40% of their units.

A real estate agent friend noted that given Lynden Woods’ momentum, selling out in one day would not have been difficult. “Developer CapitaLand probably held back some units. If the whole project had sold out in a single day, it would’ve triggered media hype—and possibly government intervention.”

This makes some sense. Last Thursday, Minister in the Prime Minister’s Office and Second Minister for Finance and National Development, Indranee Rajah, speaking at the REDAS Real Estate Market Outlook 2025 Seminar, cautioned that although price growth in both private and resale HDB markets showed signs of stabilising, the government would continue to monitor the market closely and adjust policies if needed.

This suggests that the revised Seller’s Stamp Duty is merely an “appetizer.” If prices and transaction volumes continue to rise rapidly, more cooling measures will likely follow.

Higher proportion of short-term sellers

The government adjusted the SSD mainly to curb short-term speculation and encourage buyers to purchase private property for owner-occupation and long-term holding.

But does buying for owner-occupation mean it’s not an investment?

According to ERA’s property data, in 2020, 358 sellers sold their private homes after holding them for three to four years. Last year, that number surged to 2,104. At the same time, the proportion of sellers holding for more than five years dropped from 87.7% in 2020 to 72.5% last year.

Why the sharp rise in short-term sellers? Clearly, it’s closely linked to the significant price surge in recent years.

Many who bought new private homes between 2018 and 2019 have made paper gains—some by chance, others by luck. As their properties reach completion, they are selling at high prices. Many are reinvesting their profits into new projects, enticed by the promise of quick returns.

Thus, fuelled by property agents and developers touting the idea that “prices only go up,” buyers are lulled into a false sense of security, trading properties one after another like “bag-holders.” Prices keep rising: $2,000 psf is now the norm, $2.5 million a “sweet spot,” and perhaps $3,000 psf will soon seem reasonable.

As a result, unless the market halts its upward trend, buyers will inevitably view home purchases as investments. The urge to sell high later will continue to drive speculative behaviour.

But good times eventually end. When the tide recedes, who will be the naked swimmer? When the music stops, who will be left holding the bag?

Homes should not be tools for wealth-building; 99-year leases are depreciating assets

The term “bag-holder” originated in stock trading. It refers to an investor who buys at or near a market peak, only to see prices fall.

When a stock or commodity is priced far above its intrinsic value, buying it is foolish. But in the investment world—including real estate—“foolish” buyers are common. Every bag-holder probably knows they’re buying at a high price, but they believe they won’t be the last. They’re confident they’ll still make money.

Houses are meant for living in, not for wealth-building—especially leasehold private properties with 99-year terms. These are depreciating assets that ultimately lose all value. No country has become wealthy solely through real estate. And for an individual to achieve life-changing wealth simply by flipping one or two homes—a feat unreachable through decades of hard work—is rare and unrealistic.

Yet in Singapore, such stories are common. Everyone seems eager to be a bag-holder, to get rich through flipping.

What does this tell us? Is Singapore an exception, where the property market defies all historical bubbles, always rising and never falling—a surefire path to riches? Or is it simply experiencing an unusually long bull run, causing buyers to overlook massive investment risks?

In any housing market, prices move both ways—rising with strong demand, falling when demand weakens. There has never been a real estate market in the world that only goes up.

Before this current upcycle, Singapore’s property market experienced a downtrend from 2013 to 2016. But recent years of surging prices have caused many to forget that, fuelling the myth of an ever-rising Singapore property market.

Once, China and Hong Kong were also seen as exceptions, with similar myths. Now, those myths have been shattered. Will Singapore’s property market truly be the exception—or just another bubble waiting to burst?

What matters is this: when you see prices still rising and believe there’s money to be made, so you enter the market hoping someone else will buy from you later—be warned. That buyer might not show up.

Because you might be the last bag-holder.