September 2022 Cooling Measure – Who Will Be Affected & How?

manfred lau
6 min readOct 14, 2022


Compared to 12 months ago, the property market is now arguable frothier: the economic outlook has darkened, inflation is the highest in over a decade and cheap financing seems but a trend of the past. Just last week, another set of measures was rolled out to encourage prudent borrowing, bringing the property market closer to an inflection point.

Should prospective homebuyers pull the trigger on a unit now or wait for a meaningful price correction? This article lays out my market prognosis and strategies for homebuyers.

Impact of December 2021 Cooling Measures Short-lived

The avalanche of headwinds began with the introduction of cooling measures late last year that raised Additional Buyer’s Stamp Duty (ABSD) and tightened financing. The immediate aftermath was a lull of housing activity amid caution.

Developers held back on launching sizeable new projects and overall sales volumes fell by a third in Q1 2022, residential enbloc activity also slowed noticeably. By the second quarter, however, private home sales had rebounded. The robust take-up of new project launches, such as Piccadilly Grand and Liv@MB in the Rest of Central Region (RCR), reignited market engines and contributed to an acceleration of home prices in Q2 2022. In the Outside Central Region (OCR), Amo Residence, Sky Eden@Bedok and Lentor Modern, were also met with positive reception.

Fresh September 2022 Measures to Encourage Prudent Borrowing

Summary of the September Cooling Measure

As mortgage rates have already exceeded 3% in recent months, the upward calibration of the medium-term stress test interest rate is necessary to safeguard the debt servicing ability of borrowers in a rising rate environment. The reduction of LTV limits from 85% to 80% for HDB flats, together with the increase in the medium-term interest rate floor used to compute maximum loan amounts for property will reduce the leverage of new home buyers and will help moderate price growth. These pre-emptive moves are necessary because buyers may not factor in projected increases in their mortgage liabilities when interest rates rise.

The introduction of a 15-month waiting period for private property owners will dampen the demand and prices for such flats, as private property owners are likely to bid higher for their purchases than first-time home buyers. However, this could lead to increases in rentals as private property owners resort to renting units during the waiting period. Nonetheless, this would have less impact on home affordability than allowing prices of resale flats to be pushed up without delay.

The latest property cooling measures are aimed specifically at the resale segment of the public housing market. The biggest beneficiaries will be first-time home buyers. Although they will be affected by the tighter limits on leverage, HDB grants can offset that. Private home owners above 55 and those with special needs are appropriately excluded from the 15-month waiting period.

Moving forward, we can expect to see less million-dollar HDB transactions, of which the bulk of the latest round of measures are directed at.

Market Fundamentals Intact and Healthy Over the Long Term

The recent success of various property launches are underpinned by idiosyncratic factors — such as pent-up local demand, but there are fundamental factors driving the wider market.

For starters, the labour market has remained extremely tight, despite slowing economic momentum; economists expect our unemployment rate to reach 2% by the end of the year from an already-low 2.1% presently. Coupled with strengthening wage growth, this has bolstered property demand. Another important driving metric is the continual build-up of household net worth, which hit a record of S$2.46 billion in Q2 2022.

Over the long run, property demand is expected to still grow at a healthy rate. The secular decline in household size due to declining birth rates translates into sustained demand for housing units, albeit of smaller sizes. The mass adoption of hybrid work norms in the new pandemic normal also left many craving for individual living spaces. The easing of borders and the new employment pass schemes to draw top talent and to plug skills shortages in the tech sector will help arrest the population decline and provide an uplift to property buying and rental demand.

Property Demand to Moderate Amidst Multiple Headwinds

Forecasters polled by the Monetary Authority of Singapore (MAS) predicts that:

Economic growth will slow to 2.8% next year from an expected 3.5% this year. Primary home sales are expected to moderate from about 13,000 units in 2021 to 9,000 units this year and ease further to 8,000 units next year. Overall private home prices will see a 9% rise for 2022 following last year’s 10.6% growth, with a further moderation to 1–3% growth for 2023.

Are Homes Still Affordable With New Pricing Benchmarks?

Barring a full-blown economic recession or cooling measures, the property market remains bullish. At just over 22,000 units, the stock of unsold units as of Q2 2022 amounts to merely 2 years of primary home sales, giving developers the upper hand. Most of the unsold units are concentrated in projects due to be completed in 2024 or later, which means developers are in no hurry to clear inventory.

As the market maintains pricing momentum, it will not take long before the market shifts to a new pricing norm of around S$2 million for a new suburban home of around 800–1000 square feet. A household securing a 30-year S$1.5 million loan (75% LTV) would need a minimum income of around $13,000. For the upgrading cohort aged 30–44 years, more than 45% of households draws a reported monthly income of S$12,000 or more, attesting to the relative affordability of new suburban homes.

In Hopes of Prices Dipping, Is It Worth Timing the Market?

Given the broadly intact market upcycle, attempts to time the market bottom in the months ahead will likely prove futile. For owner-occupiers, needs-based considerations i.e.( location, amenities, connectivity, and proximity to schools and families) should take precedence rather than bottom fishing.

Over the next 12 months, we can expect interesting launches such as mixed-use and integrated developments as well as downtown living options. More importantly than before, prospective homebuyers should carefully consider their ability to service their mortgage in a volatile economic environment and a climate of prolonged elevated interest rates (something that I have been and will always advocate).

Some projects which have already been completed or nearing completion could see developers offer discounts to move remaining units. These units are gems waiting to be uncovered. In my previous article (link here), I highlighted the Core Central Region (CCR) as the next hotspot as home prices have only risen by a modest 12% this cycle, as compared to a 42% and 36% increment for RCR and OCR home prices respectively. The continual easing of borders and open-door policy to foreign talent bode well for property demand, especially in prime areas.


In a climate of higher ABSD, taxes, and interest rates, is property as a form of investment still viable? To answer this, we need to first understand that property demand is a derived demand and property investing is akin to investing in Singapore’s long-term future, which also offers the added characteristic of leverage.

Over a holding period of 10 years or more, the projected internal rate of return (IRR) for properties stands at around 7%–9% per annum, which could still be an attractive risk-adjusted option for some, especially in a climate of financial market volatility. If ABSD is incurred, an IRR of around 5% is more probable.

As such, property investment in the local context remains a meaningful complement to a diversified investment strategy and an effective hedge against inflation. Perhaps, the final straw that may break the housing camel’s back would be an outright recession impacting employment and income, or the roll-out of further measures. While the property market cannot rise in a linear fashion indefinitely, it’s long term prospects remain sanguine, on the back of Singapore’s political and economic stability. A reasonable entry price and exit strategy, adequate research and sound holding power will allow homebuyers to ride out market cycles victorious.

I hope this article serves purposeful in helping you make a more well-informed decision, regardless of whether you’re purchasing a property for own-stay or investment. As always, feel free to share your opinion in the comment section and I will take time to address them when I can. Till next time!



manfred lau

Real Estate Agent based in Singapore sharing bite-sized content while trying to keep it light. If you’re reading my stories, I hope you enjoy them!