Singapore Home Price Growth Slows to 0.2% in Q4 as Market Cools 

Limited project launches have slowed down home sales and dampened Singapore’s housing market in the fourth quarter, causing prices for new private homes to rise by a mere 0.2 percent from the preceding three months and temper full-year price growth to 8.4 percent.

An index tracking developer sales of new non-subsidised housing published by Singapore’s Urban Redevelopment Authority (URA) inched up by 0.4 points to 188.2 points in the fourth quarter, from 187.8 points the three months prior, growing at a fraction of the 3.8 percent price growth recorded in the July through September period, according to the flash estimates released on Tuesday.

For all of 2022, home price increases eased to 8.4 percent from the 10.6 percent surge seen in 2021, with analysts forecasting slower growth this year despite stable demand for new homes.

“The URA All Residential Price Index rose by a very slight 0.2 percent q-o-q in Q4 2022 mainly due to a lack of new prominent new launches in the final quarter of the year and with local homebuyers set on revenge travel,” Leonard Tay, research head at Knight Frank Singapore, in a note to journalists. “With each subsequent new project that had significant numbers of units selling out upon 48 hours of launch, homebuyer demand returned to showflats and prices continued to climb.”

Sales Drop 75%

Excluding subsidised housing and the hybrid public-private executive condo segment, home sales fell to an estimated 700 private units in the fourth quarter, which was down by 68 percent from the 2,187 that changed hands in the previous three months, analysts from Propnex Realty noted, citing URA data. Year-on-year, the sales volume for October through December was less than a quarter of the 3,018 units sold in the last three months of 2021.

With home supply dwindling in the face of persistent buyer demand, home prices in Singapore have now risen for 11 consecutive quarters and are up by an aggregate 23.7 percent since the first quarter of 2020, when prices fell by 1 percent at the onset of the coronavirus pandemic.

“The Singapore residential property market has remained relatively resilient so far, and we believe this will continue to give home buyers and investors the confidence to purchase properties this year,” Ismail Gafoor, chief executive of PropNex Realty. “While the overall market sentiment in 2022 is less exuberant than 2021, we still saw healthy home buying interest.”

Despite slackening from the 1.5 percent quarterly price growth seen in the July through September period, values for landed homes, which include bungalows, terrace houses and shophouses, grew most quickly among Singapore locations last quarter at 0.5 percent compared to the preceding three months.

Price growth for non-landed private properties, which include condos and ECs, fell from the 4.4 percent pace set in the third quarter to rise by just 0.1 percent from October through December, compared to the preceding three months.

Fringe Growth

By location, prices for homes in the city fringe – officially referred to as the Rest of Central Region (RCR) – rose most quickly last quarter, climbing by 2.6 percent compared to the previous three months, although this pace represented a slowdown from the 2.8 percent increase seen from July through September.

In the city centre, referred to in official statistics as the Core Central Region (CCR), price growth fell to 0.5 percent last quarter from 2.3 percent previously.

In the suburbs or the Outside Central Region (OCR), the absence of major project launches helped bring home prices down by 2.6 percent in the fourth quarter, after rates had jumped 7.5 percent in the previous three months.

For the full year, the OCR still saw home prices leap by 9.3 percent compared to 2021, followed by a 9.2 percent increase in the RCR and a 4.6 percent rise in the CCR, according to the estimates. The URA is set to release final figures on 27 January.

Sustained Slow Sales

In addition to the shortage of supply and the busy travel schedules of Singapore’s monied classes, PropNex’s Gafoor said the round of property cooling measures rolled out on 30 September, as well as rising borrowing costs and high inflation dampened market activity in the fourth quarter, providing some relief for buyers struggling to keep pace with rising housing costs.

“Overall private home prices as tracked by the URA PPI have been rising since 2017,” he said in a note on Tuesday. “In our view, the moderation in price growth in Q4 2022 is not a bad thing for the overall market because it helps to keep home prices sustainable.”

Gafoor estimates that 7,300 new private homes were sold in 2022, which would be a more than 40 percent decrease from the 13,027 units which changed hands in 2021, and would bring the property market back to activity levels last seen in 2014 and 2015.

For 2023, Singapore’s housing market will remain undersupplied according to Knight Frank’s Tay, even as he expects developers to launch about 12,000 units this year, with at least 17,000 new homes scheduled to be completed during the period.

Despite low supply and recent homebuyer demand, analysts are expecting overall price growth to soften in 2023 on the back of rising borrowing costs, the ongoing impact of property cooling measures and a gloomy macroeconomic outlook.

Knight Frank’s Tay predicts 5 to 7 percent price growth for 2023, while PropNex’s Gafoor expects an average 6 percent increase. At Cushman & Wakefield, Wong Xian Yang head of research for the property consultancy’s Singapore business foresees only 3 percent growth.

“Overall, we expect the demand for homes in Singapore to remain stable in 2023, barring a deep recession,” Gafoor said, noting that home sales may hover around 8,000 to 9,000 units this year.