Private house prices fell 0.2% year on year in 2Q2023, the first drop since 1Q2020

Private residential prices recorded an increase in the range of 0.2% q-o-q in 2Q2023 which was a change from previous 3.3% growth charted the prior quarter, based on figures published by URA on the 28th of July. The first decrease since 1Q2020, when prices dropped one% per month following the outbreak from the covid-19 epidemic.

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The decline ended a 12-year streak of consecutive quarters of increase in private property prices, according to Eugene Lim, key executive office manager at ERA Realty Network. “These indicators indicate there is a possibility property price is beginning to show signs of a slowdown following three rounds of cooling measures that began in late 2021 and a high-interest rates,” the executive says.

Christine Sun, senior vice head of research and analytics of research and analytics at OrangeTee & Tie, adds that other factors contributing to the decline include a rise in private home completions which put stress on the sellers. “The inventory of residential units completed by private homeowners (excluding executive condominiums, also known as ECs) has been increased by 4,227 units in 2Q2023, compared to the growth of just 2,864 units the prior month,” she points out.

The decline in private housing prices was driven by a lower performance in both the land and non-landed segments. In 2Q2023, the prices of non-landed properties decreased by 0.6% q-o-q after charting 2.6% q-o-q growth in 1Q2023. Meanwhile, prices for land-based properties were up 1.1% q-o-q last quarter which was significantly lower than 1Q2023, which saw a 5.9% increase in 1Q2023.

RCR sees biggest fall
For non-landed properties The decline in the prices was primarily due to those in the Rest of Central Region (RCR) in which prices dropped 2.5% q-o-q in 2Q2023 after an increase of 4.4% increase in 1Q2023. “This could be due to the new projects like Riviere, Piccadilly Grand and Amber Park clearing their last units of the quarter, leading to lower median prices” states Tricia Song, director of research Southeast Asia at CBRE.

She also explains that the new RCR projects that were announced during the quarter like Tembusu Grand, The Reserve Residences and Blossoms by the Park could be competing with older inventory and reduced price expectations on second-hand markets.

Reserves Residences Reserves Residences was the best-selling new development in the last quarter having sold 590 homes for an average price of $2,473 per square foot. Tembusu Grand was second with 362 units sold at an average price of $2,463 per square foot.

Within the Core Central Region (CCR) Prices fell to 0.1% q-o-q in 2Q2023 in comparison to a 0.8% increase in the prior quarter. This was a reverse of the estimates for flash that were released in July 3 that showed the possibility of a 0.3% q-o-q increase. “The CCR market, which is a bigger international buyers, was the most affected by the most recent series of cool measures” notes Wong Xian Yang, head of research for Singapore and Southeast Asia at Cushman & Wakefield. The CCR had a drop in its quarterly sales in sales by 8.8% to 995 units.

Within the Outside Central Region (OCR) The prices increased in the region of 1.2% q-o-q in 2Q2023 which was a slight decrease in comparison to 1.9% in 1Q2023. 1.9% rise in 1Q2023. The decrease is due to the lower volume of transactions that fell 8.2% q-o-q to 1,779 units. This is a result of a lack of new launches, with just 40 units being offered for sale by the OCR the last quarter.

For the land section, Wong notes that while prices have slowed down however, it continues to rise with the help of a stable employment market and a growing demand, particularly from owners with increasing wealth and a desire for bigger living areas.

ERA’ Lim concurs. “As the most highly regarded asset class that is known for its large-quantity transactions and exclusive status buyers are reluctant to lower prices, as buyers are cautious about excessively paying. In the end, the prices of landed homes increased however, transaction volume dropped 11.7% q-o-q, with just 286 homes being closed,” he comments.

Based on the 2Q2023 figures, the overall private property costs up by 3.1% as of 1H2023. The total number of private homes were purchased during the first quarter this year. That’s 21.8% lower than 1H2022. “Buyers are becoming more price-sensitive, and discerning with the increasing number of new launches coming into coming,” says Wong.

Rents continue to rise however, at a slower rate.
In 2Q2023, residential private rents increased for the 11th consecutive quarter, but at a slower rate. The private home rental market grew 2.8% q-o-q, significantly less that those who saw 7.2% increase in 1Q2023. “This is the smallest quarterly increase in rents since 4Q2021,” notes Huttons’ Lee.

He also noted that all areas of the residential market experienced an overall decrease in rents. Rentals on non-land properties were up 2.3% q-o-q in 2Q2023 against 6.2% growth in 1Q2023. It was the CCR, RCR and OCR experienced rent increases of 2% 2% respectively. 2.9% respectively. For land-based properties rents climbed 6.7% in 2Q2023, more than halving from 14.5% growth logged in 1Q2023.

The moderate growth in rental comes from an increase in supply. There were 4,401 residential units built in 2Q2023, 48.4% higher than 1Q2023. As completions continue outstrip demand, the vacancy rate for rental properties have increased by 6.3% in 2Q2023 from 6.0% in Q1 2023,” notes CBRE’s Song. She anticipates that rents will decrease further as we move forward, with plenty of new properties coming in the next quarters. “Expatriate demand may slow as businesses restructure their operations and reduce hiring in the face of tough economic conditions,” she adds.

The new launches will pick up in order to increase sales of new homes
In the next few months an increase in launches are expected to boost new homes sales. “July is expected to be a major month, with a minimum of 1,108 units sold already across four new launches that will be launched in the weekend between 8 and 9 and 15-16 July” Song says. Song.

ERA’s Lim anticipates that new homes sales over the course of the year to surpass the 7,099 units offered by developers in the previous year. “The amount of new sale units that have been sold in 2023 as of today (July) already accounted for 65% of the 2022’s figures,” he points out. A projected 4,625 homes will be put on the market in the 2H2023 period.

OrangeTee & Tie’s Sun believes private property prices will remain stable as more housing arrives on the market. “[Full-year rate of price increase] may be lower, ranging from 4-6% as compared the figure of 8.6% in 2022 and 10.6% in 2021,” she predicts.

Cushman and Wakefield’s Wong is in agreement, pointing out the cooling policies and moderate growth in the economy, along with higher rates of new construction, will limit price increases to two% up to% in 2023. “Unemployment rates are likely to remain low and rising rates of resale HDB rates (+1.5% q-o-q in 2Q2023 as opposed to +1.0% q-o-q in 1Q2023) will boost upgrade market demand to buy private properties,” he says.