Singapore increase of 2.7% in Private residental property in the 4Q 23
Prices of residential properties in Singapore increased by 2.7% for the fourth quarter 2023. Sales at new launches, priced at fresh benchmarks and low transaction volume boosted this increase.
The Q4 surge lifted the price index, which had only risen by 0.8% in Q3, and ended the year at a 6.7% gain. This is a slight decrease from the 8.6% increase in 2020 and the 10.6% increase in 2011.
Price fluctuations between 2023 and 2023 indicate that prices of private homes have reached a peak.
This is still the seventh consecutive year of private home price growth after the low in mid-2017. Prices have also risen by 32.3% since the last low in Q1 of 2020.
The price increases in 2023 were largely driven by suburban non-landed markets, where prices rose by 13,8% over the course of the year. The price increases in Outside Central Regions (OCRs) far exceeded those of the Rest of Central Regions (RCRs), where prices increased by 2.7 percent, and the prime Core Central Regions (CCRs), which saw a 2.1-percent increase.
In the OCR, private condo prices were up 4.6% quarter on quarter after a 5.5% rise in Q3. CCR prices increased slightly less in the fourth-quarter, with a rise of only 4.2 percent. This was a slight decrease from the previous quarter’s decrease of 2.7%.
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The fourth quarter saw a surprising increase in sales for two new launches, which were introduced at benchmark price.
RCR prices decreased by 1.2% in Q4, following a 2.1% increase the quarter before. Song suggested that existing projects could have discounted their last unsold units to contribute to the decrease in the RCR index.
Analysts say that the slowdown in price growth outside the OCR and lower sales volumes for the Q4 as well as for the entire year show a growing buyer resistance against already high prices.
Noting that non-landed prices have reached their highest historical levels as of Q4 2023. “Compared with the pre-pandemic level (Q4 2019,) CCR, RCR, and OCR non landed prices are up cumulatively by 11 percent, 37 percent, and 40%, respectively.”
Although household balance sheet are in good shape, “homebuyers will continue to remain circumspect” when making housing decisions.
Foreign buyers had stayed away after the April hike in the Additional Buyers Stamp Duty.
In Q4, Singaporeans accounted 98.5 percent of all private home purchasers, and foreigners only accounted 1.5 per cent.
Using caveats as of Jan 2, 2024 data, foreign purchases dropped to 62 from 271 during Q1 2023. This is also the lowest amount since ABSD was introduced in December 2011 by the government.
The transaction volume decreased throughout the year. The volume of transactions was down during the year.
In 2022, the total sales of 21,890 units was down 15%. URA reported that it is also the lowest sales volume for an entire year since 2016. This includes all new sales as well as resales or subsales. Executive condo units are excluded.
Landed property sales were strong in the fourth quarter. In the fourth quarter, home prices increased by 4.5 percent. This was a turnaround from a decline of 3.6% in the third quarter. The landed home prices in 2023 will be up 7.8 %, down from 9.6 % in 2022.
The limited supply of freehold landed properties will continue to be a major obstacle in completing deals.
The price increase of 4.5% could be attributed to the slight increase in detached house transactions in Q4 from 39 units in the previous quarter. The average detached house price also rose around 16 per cent from quarter to quarter, reaching S$1,714 on land. This could have helped to offset the lower prices in semi-detached house and terrace houses segments.
Landed home owners are also more inclined to raise their prices and have less urgency to sell. As buyers and vendors reach an impasse over prices, more landed transactions have failed.
The market analysts expect that prices will continue to decline, with a range of 3 to 5% in the coming years.
It was noted that current prices would continue deterring demand. The price of homes is unlikely to change significantly in 2024 due to low unsold inventories and resilient household balances.
The new-launch price is expected to be “elevated” due to the already committed costs for land and construction.
Developers are pricing units more sensitively to try and boost sales during the launch weekend.
Investors who want to preserve capital, increase their income, or receive recurring income, both domestic and foreign, are likely to wait until interest rates have peaked, stabilised, and maybe even reduced, as well as there being more clarity on the economic outlook.
It is important to note that the history shows that investors who are familiar with Singapore’s residential market will be quick to respond when there are periods of quiet activity, and then a return of activity