In the wake of 12 quarters consecutively expansion the private housing market edged down in the range of 0.4% q-o-q in 2Q2023 according to estimates from a flash survey published on July 3 by URA the 3rd of July. This reversed 1Q2023, which saw 3.3% q-o-q growth recorded for the 1Q2023 period. This is the first decrease that has been recorded in the last three years, since 1Q2020 when prices fell by 1% per month.
Grand Dunman condo price with a total suite area of 25,234.3 with a Gross Maximum Area (GFA) of 88,321 square metres (sq m).
“It appears that the most recent set of measures to cool the market that were announced on April 26 with the rise in interest rates which reduced affordability, could have stopped the price of homes as those who are investing their money become more price-sensitive and wait in the background before making a decision what their next step will be,” says Leonard Tay who is the head of research for Knight Frank Singapore.
The decrease in 2Q2023’s prices was driven by slower price growth across all segments of the market. Prices for non-landed properties decreased by 0.5% q-o-q, while prices for the landed properties were only 0.1% q-o-q, its the lowest gain in the past two years.
In the private residential non-landed section, the prices are reduced due to those in the Rest of Central Region (RCR) in which prices decreased 2.6% q-o-q in 2Q2023 which was a reverse of 1Q2023. 4.4% growth recorded in 1Q2023. The Core Central Region (CCR) the prices increased 0.3% q-o-q, slowing from 0.8% growth in 1Q2023 The rates within the Outside Central Region (OCR) increased by 1.2%, slowing from the 1.9% growth recorded in 1Q2023.
Lam Chern Woon, head of research and consulting at Edmund Tie, says that prices are competitive for the four major RCR projects that will be launched in the 2Q2023 period — Tembusu Grand, Blossoms by the Park, The Continuum and The Reserve Residences which contributed to the decline in prices across the area. “In this secondary marketplace, homeowners have also encountered the opposition of buyers to price, as the market declined, but financing limitations remained strict,” he adds.
Wong Xian Yang, head of research for Singapore and Southeast Asia at Cushman & Wakefield, claims that his findings are based on caveat data at the time of writing on July 3, RCR new sales median prices dropped 5.8% q-o-q to $2,498 per square foot, down from $2,652 in the 1Q2023. He also explains that the vast majority of new developments were leasehold developments with 99 years of lease that could have pushed the RCR prices down. In the 1Q2023 the new home sales of the RCR fueled in part by freehold Terra Hill, that saw homes sold for a the median price of $2,692 per square foot.
Looking at the estimates of flash for 2Q2023, private home prices have increased by 2.9% in 1H2023 and 27.5% since bottoming in 1Q2020, according to Tricia Song, the head of research on Southeast Asia at CBRE.
Song believes that the effects on the cooling measure will “continue to resonate”. She notes that foreign buyers have cooled substantially, with foreign buyers making up 4% of all condo sales in the 2Q2023, which is down from 7% in 1Q2023 as well as 4Q2022, respectively. Meanwhile, local buying sentiment remains tentative in light of downbeat macroeconomic conditions and elevated interest rates, though demand remains strong for “realistically-priced projects” with attractive locational attributes, she adds.
In any event, Song says home prices have reached their peak and are likely to remain stable in the next couple of quarters. “Barring large-scale retrenchments or prolonged recessions or a major price decline, a significant correction is unlikely due to the small amount of inventory of unsold and generally sound household balance books,” she continues. CBRE maintains the private house price projection for 2023 at 3% for 2023. This is a slight decrease off from 8.6% growth chalked up in 2022.
Edmund Tie’s Lam however, reveals that, despite slower price growth across all segments, the prices of homes not on land within CCR and OCR continue to rise. CCR as well as the OCR continue to show gains. “It is not yet time to determine the point at which we will see the highest for the cycle and we are expecting property prices to fluctuate over the next one to three quarters” the economist says.
Lam anticipates any price increases throughout the remainder of this year to slow down due to coming launches. Lam predicts property prices could increase by up to 3% up to% this year due to the new private home sales of 7,700 to 8,000 units.