With residential prices rising, are property stocks still a good buy?

What happened?

Recently, I spoke at a seminar on “Property vs stocks - What is more attractive?”.

One of the questions that was asked as the panel was whether the Singapore property sector is in a bubble, and if it is still worthwhile buying property stocks.

Recently, we have seen Singapore stocks rallying, with several blue chip stocks reaching new all-time highs. 

Singapore property stocks have also rebounded strongly from the lows, supported by improving sentiment with a pickup in sales volumes. 

In this article, I will look at the latest trends in the residential property market, and find out if property stocks still look attractive on valuation.

Private residential prices were up 0.9% in 3rd quarter 2025

Private residential prices were up 0.9% quarter-on-quarter in third quarter of 2025, marginally lower than the 1.0% quarter-on-quarter increase in 2Q25. 

On a year-on-year basis, private residential prices increased 5.1% in 3Q25, above that of estimated headline inflation rate of 0.62% year-on-year in 3Q25. 

This quarter’s private residential price increases continued to be led landed properties which rose 1.4% quarter-on-quarter in 3Q25.  

Non-landed properties reported price increased by 0.8% quarter-on-quarter in 3Q25. 

Year-to-date, private home prices have increased by 2.7% for the period 9M 2025.

The sequential increase in HDB resale prices continued to ease, with 3Q25 prices up 0.4% quarter-on-quarter, the smallest quarterly price increase since 2Q20. 

HDB resale prices have stabilised but there are more million-dollar resale transactions.  

In 3Q 2025, there were 480 resale transactions of more than S$1.0 million, compared to 415 of such transactions in 2Q 2025. 

On a year-on-year basis, HDB resale prices have continued to outpace that of private residential prices, with a 5.6% year-on-year increase.  

Year-to-date, HDB resale prices have risen by 2.9% in 9M 2025. 

HDB resale volume was 7,221 in 3Q25, +1.7% quarter-on-quarter and -11.3% year-on-year.  

The year-on-year slowdown in HDB resale transactions could be due to the steady supply of attractively located built-to-order flats. 

In October 2025, HDB launched the final Build-To-Order (BTO) sales exercise for the year, offering 9,144 flats across ten projects in Ang Mo Kio, Bedok, Bishan, Bukit Merah, Jurong East, Sengkang, Toa Payoh and Yishun. 

This includes HDB’s fifth Community Care Apartment (CCA) project in Sengkang.

Robust price increases across the segments 

Despite the record high launches in the city region, prices of non-landed properties in the Core Central Region (CCR) continued to climb steadily, increased by 1.7% quarter-on-quarter in 3Q25, compared to +3.0% quarter-on-quarter in 2Q25. 

In the Rest of Central Region (RCR), and Outside Central Region (OCR) segments, price increases at a more measured pace, +0.3% quarter-on-quarter and +0.8% quarter-on-quarter, respectively.  

The moderation in the RCR was likely due to pricing at new launches like Lyndenwoods (336 units sold at a median price of $2,462 psf). 

On the other hand, volume and prices in CCR were driven by three key projects which sold total of 835 units – Robertson Opus (171 units sold at $3,356), Upperhouse at Orchard Boulevard (202 units sold at $3,304) and River Green (465 units sold at $3,120). 

CCR recorded overall new home sales of 903 units in 3Q 2025, the highest quarterly CCR sales since 4Q 2010. 

Year-to-date till end-September 2025, developers’ new homes sales totalled 7,875 units, surpassing full year 2024 new home sales of 6,469 units.  

We believe the strong momentum in new homes sales to continue in 4Q 2025.  In October, 2,424 new private homes were sold, making this the strongest monthly sales since 2024.  

The stellar performance was led by four new projects launched in October – Skye at Holland, Faber Residence, Penrith and Zyon Grand. The four projects achieved take up rate of between 84% to 99% during the launch.  

For the full year 2025, new private residential sales will likely surpass 11,000 units, up from the initial consensus forecast of 10,000 units.

Strong growth in transaction volumes  

Overall private residential volumes surged 38% year-on-year to 7,404 units for 3Q25, or +44% quarter-on-quarter. 3Q25 volume was a strong recovery from a weak 2Q25 which recorded overall private residential volumes of 5,128. 

Primary sales activity was robust with volume increased by 171% quarter-on-quarter and 183% year-on-year. In 3Q25, eight projects were launched with total 4,191 units, compared with 1,520 units launched in 2Q2025. 

As a result, secondary sales continued to fall year-on-year, to 4,116 units—extending the downtrend since 3Q24 as buyers increasingly favoured the attractive locations of new launches. 

Lower mortgage rates boost demand

SGD interest rates continue to slide in tandem with the U.S. Fed’s rate cut actions.  U.S. Fed cut interest rate by 25 basis points in October. 

Year-to-date, U.S. Fed has lowered interest rate by 50 basis points. 

The 3-month compounded SORA, the key benchmark for floating-rate mortgages in Singapore, has fallen by about 180 basis points in 2025. That drop has pulled mortgage rates lower and improved affordability for borrowers.

New launches in 3Q25 reported healthy take-up rates, including Wing Tai’s River Green (89%), CapitaLand’s LyndenWoods (98%) and GuocoLand’s Springleaf Residence (94%).   

Rental rates outside central core region remains firm

Private residential rents increased in 3Q25, with the overall rent index rising 1.2% quarter-on-quarter and 2.4% year-on-year to 161.7. 

Non-landed rents grew 1.1% quarter-on-quarter and 2.7% year-on-year, supported by a 2.5% quarter-on-quarter and 2.6% year-on-year in the OCR. 

In contrast, the CCR saw a decline of 0.5% quarter-on-quarter, the only segment to record negative growth from previous quarter. 

Vacancy rate marginally lower

Private residential vacancy rate edged down by 0.2 percentage points (pp) to 6.9% in 3Q25, extending the decline from 7.1% in 2Q25. 

Vacancy levels are now broadly in line with the historical average of 6.3%, after peaking at 8.4% in 3Q23.

Given the pick-up in primary sales momentum, albeit with additional new supply coming onstream, the overall number of unsold private residential units continued to slide, down to 17,209 units, a 7.7% quarter-on-quarter decrease in 3Q25 from 18,653 units in 2Q25. 

In 3Q25, 1,776 units were completed, bringing total supply completed in 9M 2025 to 4,105 units.  

For 2025, 5,846 units are expected to be completed which marks a significant 31% decrease from the total of 8,460 units completed in 2024. For 2026, the projected units of completion is 7,810 units.

The Government is keeping private housing supply elevated under the Government Land Sales (GLS) programme, with close to 10,000 Confirmed List units in 2025 — about 50 percent above the average annual supply from 2021 to 2023. 

It also signalled that it will keep tracking economic and property market conditions to ensure there is sufficient private housing and commercial space to meet the needs of the population.

As of end-3Q 2025, there are a total supply of 36,814 private residential units (excluding Executive condominiums) in the pipeline, of which 17,029 units remained unsold.  

Based on the expected completion dates, about 27,300 units are expected to be completed by 2029.   

Singapore listed developers trade at average price-to-book ratio of 0.48x

We believe the listed real estate brokers represent the most direct proxies to the resilient residential market, with earnings directly leveraged to robust residential volume growth. 

Despite a strong share price re-rating of more than 100% YTD, PropNex and APAC Realty (both Neutral rated) offer dividend yields of 3.6% and 5.1%, respectively. 

In addition, the Singapore real estate developers trade at deep discounts to NAV amid a broad-based re-rating in the Singapore market. 

Singapore-listed property developers currently trade at an average price-to-book (P/B) ratio of 0.48x, reflecting the relatively low returns they are generating. 

At the same time, many have diversified geographically and shifted focus away from the local property market and residential developments. 

Among them, GuocoLand has significant exposure to the Singapore residential market, concentrating on premium developments. 

The company also generates recurring income through its investment properties. Its stock trades at a P/B ratio of 0.49x, in line with the sector average.

If you are interested in Singapore REITs, check out our analysis on whether Singapore REITs are more attractive with interest rates falling. 

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