After two years of strong price increases, Singapore’s residential property market has grown more sustainably in Q2 2023. This is due to three rounds of cooling measures since December 2021 and high-interest rates. Flash estimates show that private home prices have moderated across all segments in Q2 2023.
Prices
URA’s flash estimates show that overall private home prices declined by 0.4% QOQ in Q2 2023, ending the 12-quarter growth streak. Prices were up by 2.9% from end-2022.
Landed homes led the price increase in Q2 2023, with values up by 0.1% QOQ, slower than the 5.9% increase in Q1 2023. Based on URA Realis data, the average unit price for semi-detached, detached, and terrace homes fell by 12%, 7.6%, and 2.1% QOQ respectively.
Non-landed private home prices fell by 0.5% QOQ in Q2 2023, mainly due to the RCR, where prices dropped by 2.6% QOQ, after four quarters of healthy gains. Developers adopted more sensitive pricing strategies for new launches in the RCR.
Non-landed home prices in the OCR rose by 1.2% QOQ in Q2, lower than the 1.9% increase in Q1. The lack of new launches and limited unsold stock in the OCR reduced transaction volume and price growth.
CCR non-landed home prices rose by 0.3% QOQ in Q2, slower than the 0.8% QOQ growth in Q1. There were no major new launches in the CCR in Q2, as developers cleared existing inventory, with prices holding steady despite the higher ABSD rates.
Transaction
The new home sales segment grew after a weak performance in Q1. Preliminary figures show that developers sold 2,096 new private homes (ex. EC) in Q2 – a 67% increase from the 1,256 units sold in Q1 2023.
The top-selling project in Q2 was The Reserve Residences which sold 596 of its 732 units at an average unit price of $2,492 psf.
The RCR sub-market drove new home sales in Q2, making up about 75% of new homes sold, with four major launches: Tembusu Grand, Blossoms by the Park, The Continuum, and The Reserve Residences.
The CCR and OCR sub-markets accounted for 20% and 5% of net sales, respectively. There were 2,619 private homes sold on the resale market in Q2 2023 (till June) – down by 0.1% QOQ from Q1 2023, where 2,622 units were resold.
The OCR sub-market led resale activity – 1,355 OCR resale homes were sold in Q2, representing 52% of the quarter’s resale volume.
The portion of CCR resale transactions fell in Q2 (18%), compared to Q1 (21%). The higher ABSD rates cooled foreigner and investor demand.
Sub-sales remained low at 228 units, taking total private homes transactions to 4,943 units (including new sales and resale) in Q2 2023, based on caveat data.
Over 17,000 new private homes are expected to be completed in 2023. With more supply coming up, the leasing market could favor tenants – with rentals possibly flattening in H2 2023.
Outlook
The moderation in private home prices in Q2 2023 (-0.4%) from Q1 (3.3%) is a relief for the market, as home prices were rising fast. With muted economic growth – and possible technical recession risk – a slower price increase is good for the market, aligning with economic fundamentals.
The ABSD measure tightened from April 2023, after two rounds of cooling measures earlier (Dec 2021 and Sep 2022), and high-interest rates are affecting the market. Foreigner and investor demand fell as seen in caveat data, and high-interest rates dragged down the resale segment. Buyers are price sensitive after the cooling measures and high mortgage rates. Developers are pricing units accordingly.
Q3 2023 will see more new launches, especially in the RCR and OCR which should attract buyers, especially in the OCR where unsold stock is low. Projects lined up in Q3 include The Myst, Lentor Hills Residences, Grand Dunman, Pinetree Hill, Lake Garden Residences, and TMW Maxwell. Buyers who waited for more options may find opportunities in these launches.
With more new launches this year, PropNex expects developers to sell 7,000 to 7,500 new units (ex. EC) in 2023 – higher than the 7,099 units sold in 2022. Private resale volume could be 12,000 to 13,000 units – down from 14,026 units in 2022 – as high-interest rates and tight resale stock affect sales. We expect private home prices to rise in 2023, barring unforeseen events.
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