Property prices in Singapore are significantly influenced by government policies. Policies like the Additional Buyer’s Stamp Duty (ABSD) and Total Debt Servicing Ratio (TDSR) directly impact demand and borrowing capacity, while measures like land sales and public housing pricing affect overall supply and affordability. These policies, implemented to manage demand and ensure a stable property market, can lead to price fluctuations and shifts in market dynamics.
PropNex (SGX: OYY) and APAC Realty (SGX:CLN) saw their share prices spike about 10% in early morning trading on 11 August, following a slew of media updates which were deemed positive to the real estate agent industry.
Here’s a breakdown of the media update and how it benefits these two companies and the industry.
Information shared by Ministry of National Development
The Singapore Ministry of National Development (MND) is the key government ministry responsible for national land use and development planning.
The Housing & Development Board (HDB) is Singapore’s public housing authority and a statutory board under the Ministry of National Development.
Chee Hong Tat, the Minister in charge, shared several updates with the Media yesterday which gives an indication of upcoming changes in policies
1) Eligibility age for singles to buy HDB flats
Currently, singles can only buy HDB resale flats after 35 years old. Singles can also only apply for BTO after this age, and even then, they can only apply for 2-room flexi BTO flats. The income ceiling for singles who want to BTO is $7k a month.
MND is reviewing both the eligibility age for singles to buy Build-to-Order (BTO) flats, as well as the overall income ceilings, with changes to these two public housing policies to be made at an appropriate time.
To meet this and other requirements, the Minister said 55,000 BTO flats will be launched between 2025 and 2027 – 10% more than the Government’s previous supply commitment of 50,000 flats for the same period.
How would this benefit property agents?
This potential policy change could benefit property agents in several ways. First, more singles will be able to own housing. House ownership means potential sales. Once the BTO reaches its minimum occupancy period, there would be many house owners looking to sell out and upgrade.
Should the eligibility age be lowered, singles would be able to start this property cycle earlier. This means that the total addressable market for real estate agent grows.
Of course, on the flip side, the rental market would soften, but the commission on rental is much lower than the commission on the sale of a house.
2) Income Ceiling changes
The Minister said that MND is reviewing the current income ceilings. The current BTO income ceiling is $14k and the ceiling for Executive Condominiums (EC) is $16k. According to the previous Minister, these limits still cover about 8 out of 10 Singaporean households
The last changes to the income ceiling was in September 2019, when the BTO ceiling increased from $12k to $14k and the EC ceiling increased from $14k to $16k. This means that there has not been a change to the income ceiling for 6 years.
Before 2019, the income ceiling was raised by similar amounts in 2015 and 2011, which makes many people feel that an update to the income ceiling is overdue, even taking into consideration the effects of the COVID-19 pandemic which slowed income growth and also impacted the supply of housing.
How would this benefit property agents?
Property agents benefit from higher transaction volume.
A BTO flat is often seen as a “first pot of gold” due to the potential for capital appreciation after the Minimum Occupation Period (MOP). This is because BTO flats are sold at subsidised prices, and upon reaching the MOP (typically five years), owners can sell their flat on the resale market for a potentially higher price
More BTOs launches mean more people have the chance of obtaining a subsidised flat. Of course basic economics tells us that resale prices depend on supply and demand. However, it is likely that resale prices would still be substantially higher than BTO prices.
With more people having a chance to own BTOs, this means that more people would have a chance to reinvest the equity upon selling their BTO into higher value houses, whether by upgrading to a larger resale flat or a private property.
More aggressive homeowners even chase the “Sell One, Buy Two” strategy. This strategy involves selling a single property, often an HDB flat, to fund the purchase of two private homes. One to live in, one to rent out.
Obviously this approach is risky, however it is also seen as a clever way to accelerate wealth-building through property by doubling up on capital gains.
For less aggressive homeowners, with the income ceiling of EC potentially rising as well, they would have an opportunity to pursue a second subsidised flat by purchasing an EC.
ECs in Singapore are popular due to a combination of factors including their subsidised pricing compared to private condos and the availability of condo-like facilities. They offer a middle ground for those who earn too much for HDB but not enough for private housing, bridging the gap between public and private housing options.
ECs nowadays have interior buildouts and facilities that are as good as many suburban condos and yet sell at a discount of at least $400 psf or 20-25% compared to a new launch condo. This is why EC launches in the recent years have sold out quickly.
APAC Realty and Propnex Financial Performance
Both stocks have staged strong rallies this year, almost doubling from their bottom. This is due to the strong sales performance at the companies with both expected to deliver solid results in the mid year.
APAC Realty has just reported earnings of $11.3 million for the 1HFY2025 ended June 30, up 176.4% YoY. Earnings per share stood at 3.14 cents for 1H25, up from 1.15 cents before. The Group’s revenue for 1HFY2025 came in 28.8% higher YoY at $341.5 million, resulting in a profit after tax of $11.1 million.
This threefold increase in profitability is driven primarily by robust activity in the new private residential segment during the period.
APAC Realty’s interim dividend of 2.70 cents per share is three times higher than 1H2024’s payout and representing a 78.1% payout ratio. Extrpolating this to a full year, APAC Realty’s yield could reach close to 8%.
PropNex is slated to publish its 1H25 results this week and it is also expected to deliver a strong set of earnings.
Valuation
Extrapolating APAC Realty’s 1H25 performance of 3.14 cents, APAC Realty is trading just above 10x P/E.
Based on PropNex’s FY24 earnings of 5.53 cents per share, the stock is trading at nearly 30x P/E ratio. However, if PropNex delivers performance similar to APAC Realty, then the valuation will likely look reasonable.
Closing statements
Singapore’s real estate cycle is often seen as more stable than many other markets, thanks to active government intervention.
There has been a strong rebound and growth in home sales underpinned by home prices rising significantly in the last few years.
Price movements are gentler and more sustainable, with mild corrections during economic downturns as housing policies alternate between cooling and relaxing measures to smooth the volatility.
In the first half of 2025, Singapore’s private residential property market showed a mixed trend. While new home sales saw a decrease in the second quarter compared to the first, they remained higher than the same period last year. The overall private residential property price index also saw a slower increase in the second quarter.
The HDB resale market, however, remained resilient, with prices forecasted to increase and a healthy number of transactions expected throughout the year.
The reality for both companies is that as their revenue is based on transaction volumes, they still feel the fluctuations in the economic cycles harshly. The fact that stock prices for these two increases 10% just from a media update of potential impending changes attests to this point.
Lastly, here’s a tip, the National Day Rally has sometimes been the platform for the announcement of new housing policies. Who knows what the upcoming rally on 17 Aug will unveil!
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