On 12 December 2012, Palmer convened a press conference alongside Deputy Prime Minister Teo Chee Hean to apologise for the affair. The same day, the main opposition WP announced that it will contest the by-election should one be called, as it had contested the ward in 2011. SPP endorsed WP's bid. NSP declared it would stay away. RP, SDA, SDP and several individuals expressed interest including a group of former SPP candidates who joined and revived DPP.

Within a month, the writ was issued, which caught observers by surprise. PM Lee Hsien Loong explained that this was to allow constituents to elect a new MP as soon as possible before returning to the busy government schedule ahead. This would be the first time since 1977 that more than one by-election was held between a Parliament term. Compared to the decades-old Hougang, Punggol East was part of the new Sengkang estate.

Some opposition parties made overtures to WP to withdraw or work together. SDP offered to let WP run its town council should WP withdraw and SDP wins. However, these gestures were turned down. By the close of nominations, four parties were officially in the race. PAP fielded the only fresh face, while WP and SDA fielded the same candidates in 2011, the WP's being the sole woman candidate and youngest contender for the seat.

Although both RP and SDA sent in their top men, the fight was primarily between PAP and WP. Campaign barbs were noticeably milder compared to the past, as the main parties portrayed a gentler image to win over the middle ground. Local issues included the stalled upgrading works in Rivervale Plaza. WP also raised the plight of struggling young families and sale of PAP's town council software as key national issues.

The final results revealed a further disenchantment with the ruling party, as WP captured yet another seat from PAP's hands with more than a 10% swing. Another reason was attributed to several public gaffes by the PAP candidate. History was created for it was the first time a woman candidate contested and won a by-election. After 1981, it was also the second defeat for the incumbent party in a by-election. The amount for deposits had been adjusted for the second time in a by-election and the two opposition secretary-generals lost theirs, with SDA and JPS chief Desmond Lim obtaining the lowest share of the vote since independence.