The fourth quarter of 2023 saw an increase of 2.7 percent increase in the price of private residences in Singapore mainly due sales of new launches at benchmark prices and low volume of transactions.
The price index climbed by 6.7 percent in the fourth quarter, lower than 8.6 percent in 2022 and 10.6 percent in 2021.
Tan Tee Khoon is the PropertyGuru Singapore country manager. He pointed out the price fluctuations between 2023-2024 suggest that the value of homes for private use has reached their high point.
However, it is the seventh straight year of growth in private home prices after the market bottomed in mid-2017, according to Tricia Song, director of research for Singapore and South-east Asia, CBRE. She said that prices are up 323,3 percent from the low of Q1 2020.
The bulk of the 2023 price rise was driven by the non-landed market in suburban areas that saw prices rise 13.8 percent during the past year, explained Song. The Outside Central Region’s (OCR) prices have far exceeded those in the Rest of Central Region’s (RCR) which saw prices rose by 2.7 percent, and premium Core Central Region prices (CCR) was more expensive by 2.1 percent.
Quarter on quarter (qoq) Private condominium prices within the OCR were up 4.6 percent, following the 5.5 percent increase in Q3. CCR prices grew only slightly, averaging 4.2 per cent during the fourth quarter. However, they recovered from the decline in Q3 of 2.7 percent.
The fourth quarter of 2014 saw two launches priced at benchmark prices and they saw unexpectedly large sales. CapitaLand’s J’Den located in Jurong East, sold 323 units at an average of S$2,451 a square foot (psf) when it launched. UOL and SingLand’s Watten House at Bukit Timah sold the equivalent of 102 units for an average of S$3,230 per square. foot.
Wong Xian Yang, Cushman and wakefield’s head of research, said that both projects accounted for around half of all new sales in the respective segments (OCR and CCR) during the fourth quarter of.
In the RCR price index, the prices fell 1.2 percent in Q4 following an 2.1 percent increase during the preceding quarter. Song claimed that some of the current projects may have sold the remaining units for the price of. This may have contributed to the drop in the RCR Index. These include Liv @ MB in Mountbatten, Myra in Potong Pasir, and One Pearl Bank condo in Outram which is now fully sold.
Lower sales in Q4 and for the year, as well as the slower price gains outside of the OCR have sparked a growing buyer resistance to already high prices, according to analysts.
Wong, a Cushman & Wakefield analyst, said that prices for non-landed goods are currently at their historic peak. This will remain for the next quarter, which is the end of Q4 2023. “Compared to pre-pandemic prices (at Q4 2019), CCR, RCR and OCR non-landed prices are cumulatively rising by 11 percent 37%, 37 per cent and 40%, in turn,” he said.
Although balance sheets for households are in good shape, “homebuyers have been and will continue to be circumspect in their house buying decisions”, said Knight Frank head of research Leonard Tay.
Lee Sze Teck noted, however Lee Sze Teck noted, however, that Huttons director of data analysis Lee Sze Teck said the strong sales at Q4 launches was evidence of “ample liquidity of local buyers”, since foreign buyers were not buying due to the rise in Additional Buyers Stamp Duty (ABSD), last April.
In the fourth quarter, Singaporeans and permanent residents made up 98.5 per cent of home buyers who were private, while foreigners made up 1.5 per cent.
Based on caveats information from January 2nd, 2024, the amount of purchases by foreigners decreased to 62 during Q4 2023. This was compared to 271 in the Q1 of 2023. It is also the lowest since the government began introducing ABSD in December 2011 Lee said. Lee.
The volume of transactions slowed in the course of the course of the year. Based on the flash estimates released by the Urban Redevelopment Authority (URA) on Tuesday (Jan 2) the total transactions of private homes up to mid-December was 27 per cent lower than that of Q3 and fell to 3,800 units in Q4.
The total amount of units sold during the year was 18,510. This is a drop of 15% from 21,890 in 2022. URA stated that this was the smallest volume of annual sales since 2016. This figure includes new sales, subsales, and sales, and resales. It excludes executive condominium units.
Landed properties had a strong performance in the final quarter of this year. In Q4, the value of landed homes rose in 4.5 percent, and reversed the decrease of 3.6 percent from the previous quarter. In 2023, the average landed home cost increased 7.8 percent in comparison to 9.6 percent in 2022.
Demand for land-freehold freehold homes is “evergreen” According to Knight Frank’s Tay and “the biggest barrier to deals being completed will be the small supply of available stock”.
The 4.5 percent price increase could be due to a slight increase in detached house sales of 43 in the fourth quarter as opposed to 39 in the previous quarter, according to Ismail Gafoor, chief executive director at PropNex Realty. The median price for a detached home also increased by 16 percent, qoq up to S$1,714/square foot on land. He said that this may have contributed to the lower costs of semi-detached houses and terraced houses.
Landed homeowners are also likely to raise prices and show little urgency to sell, said the chief executive officer of ERA Marcus Chu. He added that more land deals failed because buyers and sellers were at odds over prices.
Analysts expect prices to remain in a downward trend, and to fall between 3 to 5 percent in the next year.
CBRE’s Song said that the current price hikes will continue to discourage buyers. She noted that, with the increase in quantity of inventory, prices are expected to decline in 2024. However, prices for homes are “unlikely to correct significantly due to the resilience of household balance sheets and the low amount of unsold inventory”.
Tay revealed that the new launch price will be “elevated” due to the construction costs and land already in place.
PropNex’s Gafoor is of the opinion that developers should set prices “more sensiblely” to increase sales on the weekend of launch.
As Tay said, those who are looking for capital preservation, appreciation and ongoing income – foreigners and locals – will likely remain on the sidelines “until the interest rates reach their peak, stabilise and perhaps reduce to a minimum, and until there’s more clarity in the outlook for economic growth”.
He stated: “History has shown, however, that investors who are familiarized with Singapore’s residential market can quickly react when periods of low activity change into periods of increased activity.”
Blossoms by the Park will be an attractive RCR project that HDB upgraders and investors should consider.
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