The prices for apartments and condos within The Core Central Region (CCR) are under pressure due to an array of variables. Based on sales up to August 22nd, 2023, median ticket sizes of resales of condos are down by 20% when compared to April of this year.
The average size of tickets for August was $2.55 million, a huge reduction in comparison to the $3.18 million average of April, a decrease of approximately 19.8%. The most expensive transaction of August thus far one million dollars condo located at 3 Orchard-By-The-Park is a distant second to the previous ones that cost $18 million to purchase the condo at the top of Beverly Hill in July, $13 million condo in The Marq on Paterson Hill that was sold at the end of June $18.8 million for Marina One in May in addition to $18 million paid for the condo at the Sculptura Ardmore on April. In addition to the average size of tickets shrinking however, the price at the top end is also declining, indicating the declining demand for luxury, top-end condos.
But ticket size isn’t all that’s which is declining. Per sq ft (PSF) base, prices have decreased to 11%. In the current time, the average PSF for CCR condos that are resold during August was $1,981, which is down from the $2,227 PSF during April. In a month-to-month comparison this means that the PSF rate decreased by 6% between July and August.
Methodology of analysis
Before diving into the reasons for this dramatic decrease, let’s discuss the method used. This study focuses on transactions that occur in the secondary market, and excludes any new launches that could affect price and are subject to the availability (whether there are any new launches within that time). Simple averages were used in calculation. In the month of August we examined the transactions closed up to August 21, 2023 but not the whole month. We think that the patterns observed will remain similar when we take into account the whole month.
It’s the perfect recipe to CCR
What is the reason behind this recession? Three key reasons emerge. First, the introduction of the 60% additional Buyer’s Stamp Duty (ABSD) on foreign buyers in May affected the market dramatically. Foreign buyers tend to choose the most desirable locations, such as Orchard Road, and these additional levies that were introduced in April 26 have definitely decreased their enthusiasm, leading to a drop in prices from May. In actuality the amount for foreign-owned buyers nearly doubled from 112 buyers in April to just 37 in July.
Second, the market has been affected by the recent search conducted by police from the Singapore Police Force (SPF) on 10 foreign citizensinvolved in money-laundering. The suspects were found in luxury condos located in the prime areas such as Leonie Hill Road, Paterson Hill along with Tomlinson Road. Because this is a ongoing investigation, further arrests may be made.
Finally, the double tensions of rising rates of interest and a strong Singapore dollar create a tough situation for foreign buyers which tend to be drawn to central locations.
Prices remain strong in OCR and RCR and OCR, reducing the price gap to condominiums in CCR
It is interesting to note that the decline in prices in the CCR seems to be a single issue. Price increases in the Rest of Central Region (RCR) and Outside Central Region (OCR) are not only resilient, but also have shown an increase of a significant amount. The average RCR price has increased in 7.5% since January this year, ranging from $1,725 to $1,854 by August. Similar to that, OCR prices have increased by 7.7%, from $1,374 PSF to $11,480 PSF in the same time.
A key point to take note of is the dramatic decrease in the price difference in between RCR as well as CCR condos. The gap, which hasn’t been this tiny since the beginning of 2008/early 2009. During the Lehman Financial Crisis, is at present just $266 in average. These trends present a variety of challenges and opportunities for prospective homeowners as well as investors alike. Although the CCR is currently a market for buyers however, the increasing costs for both RCR and OCR indicate that there is a greater level of competition. Understanding the interplay between factors like foreign buyer taxes local incidents, as well as broader economic indicators is essential to make informed choices in this constantly changing market.