Singapore’s housing market continues to show signs of cooling with average prices for new private homes rising by just 0.8 percent in the third quarter from the preceding three months after sliding 0.2 percent in the second quarter, according to government statistics released on Friday.
Declining homebuyer enthusiasm was also evident in housing sales numbers, with developer sales of new homes, excluding executive condos – a public-private hybrid property type – falling 8.5 percent to 1,946 units in the July through September period, compared to the preceding three months, despite builders increasing launches of new homes by 18 percent to 2,805 units across nine major projects.
“Despite the launch of several prominent projects mainly in the fringe and the suburban areas in Q3 2023, take-up rates were more selective,” said Leonard Tay, research head at Knight Frank Singapore. “The overall price growth has eased as homebuyers increasingly take more time to decide, and this will likely form the prevailing trend for the rest of the year and into 2024.
After the country’s government took steps over the last two years to increase land supply in an effort to cool the market, new home prices rose 3.9 percent in the first nine months of 2023 from the same period a year ago, down from an 8.2 percent gain during the first three quarters of last year, according to finalised data from the Urban Redevelopment Authority (URA).
Cooling Measures Bite
PropNex Realty attributed last quarter’s uptick to a 2.2 percent rise in prices of non-landed homes such as condominiums which counterbalance a 3.6 percent quarterly dip for landed homes, including good class bungalows – the city’s highest-end detached dwellings. Last quarter’s rise in non-landed home prices reversed a 0.6 percent dip in the second quarter.
Since 2021 Singapore has auctioned off a record number of development sites at the same time that it rolled out three rounds of cooling measures, with analysts tying this year’s market taper to the policy moves.
“The three rounds of cooling measures since December 2021 have achieved their intended outcome of taking the buzz out of the housing market and to keep prices from becoming out of sync with economic fundamentals,” said Ismail Gafoor, chief executive officer at PropNex.
“Buyers turn cautious, which leads to a pull-back in sales activity, and this cautious sentiment then feeds on itself and may prompt others to defer their purchase,” he added.
Singapore’s slower home price growth correlates with a 17 percent slide in sales of new homes, with developers finding buyers for 5,329 units in the first nine months of this year, compared to 6,409 in the first three quarters of 2022.
The slowdown left home builders with an overhang of 16,747 units of unsold homes at the end of the third quarter, although this number represented a 4.2 percent reduction from the 17,484 units sitting in inventories three months earlier, according to PropNex’ analysis of URA data.
Gafoor sees sales staying muted for the remainder of the year as homebuyers stay cautious regarding big purchases.
With just two months remaining in 2023 the Propnex boss predicts new home prices for the full year to rise a total of 4 to 5 percent – less than half the 10.6 percent price surge seen in 2021. For 2024 Gafoor expects price growth to slow further to around 3 to 4 percent.
Developers are slated to launch at least 1,022 condos in the last two months of 2023, including CapitaLand’s 368-unit J’den project in Jurong East, Hillock Green – a 474-unit Lentor Hills development by a Soilbuild-led consortium, and UOL Group’s 180-unit Watten House luxury complex in Bukit Timah.