Private home prices increased slightly by 0.5 per cent in the third quarter of 2023 after it fell in the previous quarter.
SINGAPORE: Private home prices in Singapore increased marginally in the third quarter of 2023, with analysts forecasting moderate growth for the rest of the year.
According to flash estimates released by the Urban Redevelopment Authority (URA) on Monday (Oct 2), third-quarter prices went up by 0.5 per cent – described by URA as “broadly flat” – following the 0.2 per cent dip in the previous quarter, when it fell for the first time since the first quarter of 2020.
URA noted that the latest quarter-on-quarter increase was “significantly lower” than the average quarterly increase of 2.1 per cent for 2022.
Sales fell by about 15 per cent on a quarter-on-quarter basis and by about 26 per cent on a year-on-year basis.
The prices of non-landed private residential properties went up by 2.1 per cent, compared to the 0.6 per cent decrease in the previous quarter.
The increase was due to higher prices in the Rest of Central Region (RCR) and Outside Central Region (OCR), where it increased by 2.3 per cent and 5.1 per cent respectively.
Ms Christine Sun, OrangeTee & Tie’s senior vice president of research and analytics, pointed out that “most of the new launches were from OCR and RCR last quarter; thus, prices rose faster in these two segments”.
She noted that the new launches in OCR include Lentor Hills Residences, The Myst, The Lakegarden Residences and The Arden, while those in RCR include Grand Dunman and Pinetree Hill.
Singapore Realtors Inc’s head of research and data analytics Mohan Sandrasegeran said there was more interest garnered for the new launches in the third quarter of 2023, with developer sales in July surging to a total of 1,412 units.
“This resurgence was primarily driven by the launch of several noteworthy projects throughout the third quarter, which injected a much-needed vibrancy in the new sales segment,” he said.
Prices in the Core Central Region (CCR) fell further by 2.6 per cent in the third quarter, from the 0.1 decline in the previous quarter.
The latest property cooling measures in April “had a greater impact on the CCR as the proportion of foreigners buying residential properties tends to be higher”, said Huttons Asia’s senior director for research Mr Lee Sze Teck.
The Additional Buyers’ Stamp Duty (ABSD) has cooled interest from foreigners, said ERA Singapore CEO Mr Marcus Chu.
“Furthermore, some buyers have postponed their homebuying plans during the Hungry Ghost Festival that took place from mid-August for a month.”
Edmund Tie’s head of research and consulting Mr Lam Chern Woon also noted the impact of the added ABSD for foreigners, and added that the recent billion-dollar money laundering case “has also dampened market sentiment in this segment”.
Prices of landed properties fell by 4.9 per cent in the third quarter, a reversal from the 1.1 per cent increase in the previous quarter.
The sale transaction volume totalled 4,569 in the third quarter of 2023, compared to 5,388 in the previous quarter and 6,148 in the third quarter of 2022.
OUTLOOK
The latest figures show that the property market is “shifting into a stable and sustainable mode after being in high octane drive over the past two years”, said Huttons’ Mr Lee.
He attributed the shift to the “uncertain economic outlook” and the double effect of high interest rates: On pricing out mortgage-sensitive buyers and shifting investment towards other instruments like T-bills.
With more units launched for sale in the first three quarters of 2023, more than 50 per cent higher compared to a year ago, Mr Lee said buyers are “therefore taking slightly longer to make a decision”.
Ms Sun also noted that with interest rates remaining higher for longer, homeowners face steeper monthly payments amid higher costs of living.
“As more banks revise the mortgage rates to above 4 per cent for their floating packages, the affordability threshold of potential buyers will be further reduced. Therefore, markets may continue to face pushback against higher prices.”
“As such, price growth may remain moderate for the rest of the year,” said Ms Sun, adding that it is estimated overall prices may grow by 4 per cent to 5.5 per cent for the whole of 2023.
The flash estimates are compiled based on transaction prices given in contracts submitted for stamp duty payment and data on units sold by developers up until mid-September.
URA will release its full set of real estate statistics for the third quarter of 2023 on Oct 27.