Private home prices in Singapore rose by 2.7 percent in the final three months of 2023, compared to the preceding quarter, as slower sales allowed a few luxury project launches to skew a government price index higher, while growth for the full year still lagged 2022’s pace.
Last quarter’s price growth quickened from the 0.8 percent quarterly uptick in the third quarter thanks in part to a 27 percent drop in transactions during the period, according to preliminary figures from the Urban Redevelopment Authority (URA) on Tuesday.
The data showed that in 2023 home prices rose at a softer pace of 6.7 percent compared to the 8.6 percent jump in 2022, and lagged far behind 2021’s 10.6 percent spike at the same time that transactions of new and resale private homes plunged to a seven-year low of 18,510 units.
“Property prices in Singapore have slowed down considerably (in 2023), ending the pandemic-induced surge. The increased supply of completed condos has already helped to stabilize prices substantially, and we anticipate this trend to continue in 2024,” said Christine Sun, senior vice president of research at OrangeTee & Tie.
Pricey Projects Boost Market Averages
During the fourth quarter, home prices in Singapore rose at their fastest pace since the 3.3 percent increase recorded in the first three months of the year, in large part due the launch of a set of high-end condo projects in November.
Leading last quarter’s deals was CapitaLand’s 368-unit J’den project in Jurong East where 327 units, accounting for 89 percent of the project, were sold at an average price of S$2,475 per square foot, setting a new benchmark price for suburban condo projects, based on PropNex data.
Also during November, UOL Group brought to market one of the few projects launched in Singapore’s core central region during the year, selling 114 out of the 180 units in its Watten House luxury condo project as of mid-December at an average price of S$3,209 per square foot.
Despite the success of those projects, private home sales fell to 3,800 units between October and mid-December from the 5,201 sales booked in the third quarter. For the whole year, the 6.7 percent price increase marked the slowest growth since the COVID-19 pandemic when home prices inched up by 2.2 percent.
PropNex estimates that excluding the hybrid public-private executive condo segment, private homes, sold by developers from January through mid-December 2023 totalled around 6,400 units, or 10 percent less than the 7,099 homes transacted in 2022.
Ismail Gafoor, chief executive officer of PropNex Realty, said transactions were muted last year as homebuyers turned cautious in the face of higher interest rates, muted economic growth and higher duties on housing transactions, while predicting that builders may tweak pricing to maintain sales volumes.
“We think the market still has ample liquidity to deploy and many buyers are waiting for the project that would tick as many boxes as possible,” Gafoor said. “Given the subdued home sales in 2023 and stronger pipeline of new launches in 2024, we expect developers to price units more sensitively, in a bid to drive sales momentum at the launch weekends.”
Muted Price Growth Seen in 2024
The biggest price increases in the fourth quarter were in the landed home segment, which includes terrace houses, semi-detached homes, bungalows and shophouses, with the average climbing by 4.5 percent last quarter from the preceding three months, reversing a 3.6 percent drop in the third quarter.
Price growth in the non-landed sector, which accounts for the majority of the market in high-rise dominated Singapore, remained steady at 2.2 percent in the fourth quarter – the same quarterly growth rate recorded in the the preceding three months – bringing price growth for condos and apartments to 6.5 percent for the full year of 2023.
With the government emphasising housing affordability among its policy goals, the URA last month announced the island nation’s biggest half-year land sale plan since 2013, with the schedule of plot sales for the January through June period set to add 5,450 homes to Singapore’s pipeline.
Including the upcoming programme, the URA counts 59,100 homes on the way to the market in Singapore, with nearly three-fourths of that total, or 39,700 homes, scheduled to be completed between 2023 and 2025.
That volume of supply has analysts predicting a slower market with PropNex forecasting home price growth to soften to 3 to 4 percent this year while OrangeTee expects a 3 to 6 percent average increase.
Cushman & Wakefield research head Wong Xian Yang said prices for private homes are likely to remain resilient this year although homebuyers will remain selective as housing prices and interest rates remain high.
“Competition for buyers would remain keen and developers are expected to price their launches reasonably,” Wong said. “Nonetheless, we do not expect a fall in new launch prices given still-high development costs and unsold inventory remains at relatively low levels.”
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