Singapore’s residential property increased 2.7% during 4Q 23
Singapore’s private residential property prices rose 2.7% in the fourth quarter, 2023. This was largely due to new launches with fresh benchmarks being sold at lower prices.
The Q4 spike lifted the index of prices from a 0.8% increase in Q3, ending the year with 6.7%, a decrease from the 8.6% rise in 2022 or 10.6% in 2021.
Prices of private housing have reached their peak, according to price fluctuations in 2023.
The private home prices are still up after a bottom in mid-2017. Prices have also increased by 32.3 percent since Q1 2020’s last trough.
A large part of the price increase in 2023 was due to the non-landed suburban market. The prices there rose by 13.8%. Outside Central Region price increases far outstripped those in the Rest of Central Region. Prices there rose by 2.7%, while prices for prime Core Central Region were only 2.1% higher.
After a 5.5% jump in Q3, the OCR private condo price rose by 4.6 percent quarter on quarterly (qoq). The CCR price rose slightly lower, at 4.2 % in the fourth quarter.In the fourth-quarter, two new products in particular saw unexpectedly strong sales.
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RCR prices declined by 1.2% during Q4 following a 2.1% rise in the previous quarter. Song believes that some projects have offered discounts to clear their last unsold units, which has contributed to the fall in the RCR.
Analysts noted that the decline in sales volume and price increases outside OCR for Q4 as a whole, as well the slower rate of increase for prices within OCR, indicated a greater buyer resistance towards the high prices.
The current non-landed pricing levels are at historical highs as of Q4-2023. “Compared to the levels before the pandemic (at Q4 2019, CCR, RCR and OCR) non-landed prices have risen by 11 percent, 37 percent and 40 percent, respectively.”
Although household finances are strong, “homebuyers continue to be cautious in their housing decisions”.
The Q4 launch sales were robust, indicating “ample liquidity” of local buyers. This was due to the fact that foreign buyers did not attend the launches following the increase of the Additional Buyers Stamp Duty in April.
In Q4, Singaporeans or permanent residents made up 98.5% of private homebuyers, while foreigners represented only 1.5 %.
Using caveats information as of Jan. 2, 2024, the purchases made by foreigners fell to 62 during Q4 2023 compared to 271 for Q1 2023. This is the lowest number since ABSD first began in December 2011.
Transaction volume declined during the past year. According to flash estimates released on Tuesday by the Urban Redevelopment Authority, (URA), the total number of private home sales up to mid-December were 27 per cent less than in Q3, and fell to 3,800 in Q4.
It is a 15 percent drop from the 21,890 unit sales in 2022. URA also reported that the volume of sales transactions is at its lowest level since 2016. The total includes new sales and resales. It excludes executive condos.
Landed properties showed a strong performance in the final quarter of the year. In Q4, home prices for landed properties rose 4.5 %, following a drop of 3.6 % in the prior quarter. Prices of landed homes in 2023 were 7.8% higher than they were in 2022, which was 9.6%.
The lack of available stock will be the biggest obstacle to a successful sale.
The 4.5 percent price increase could be attributed a slight uptick in detached houses transactions. There were 43 units sold in Q4 compared to 39 the quarter before. The average price per square foot of a detached property also rose 16 percent from the previous quarter to S$1,714 in Q4. This could have offset lower prices for semi-detached homes and terrace houses.
Landed homeowners also tend to set higher price tags and display little urgency to sale. The buyer and seller have reached an impasse in pricing, which has led to more land deals falling through.
Analysts predict that the price of oil will drop by 3 to 5 percent this year.
It is noted that high prices are likely to continue to hinder demand. Home prices will not correct much due to household balance sheet resilience and low unsold stock.
Prices for new launches are expected to stay “high” because of land and building costs that have already been committed.
Developers price units “more sensitively”, in an effort to increase sales momentum during the launch week-end.
Foreigners and locals seeking capital appreciation, capital preservation and recurring revenue are likely not to invest until interest rates stabilize, drop or peak.
History has shown that experienced Singaporean investors, who are familiarized with the private residential market in Singapore, will react quickly when the subdued period of activity is followed by a rebound of transactional activity.
