In 2Q2023, private home prices dipped by 0.4% q-o-q, reversing the 3.3% q-o-q gain

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In the wake of 12 quarters consecutively growing the private housing market edged down to 0.4% q-o-q in 2Q2023 according to estimates from a flash survey published on July 3 by URA the 3rd of July, reversed from 1Q2023, which saw 3.3% q-o-q growth recorded for the 1Q2023 period. This is the first decrease seen in three years following 1Q2020 when prices fell by 1% per month.

“It appears that the most recent series of cool measures, 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 on the sidelines until they decide on their next steps,” says Leonard Tay who is the head of research and analysis at Knight Frank Singapore.

The decrease in 2Q2023’s prices was driven by slower price acceleration across all market segments. Prices for non-landed properties decreased by 0.5% q-o-q, while the prices of land-based properties were only 0.1% q-o-q, its the lowest gain in the past two years.

In the private residential non-landed sector, costs were reduced due to prices in Rest of Central Region (RCR) in which prices decreased 2.6% q-o-q in 2Q2023 in contrast to previous 4.4% growth recorded in 1Q2023. Within the Core Central Region (CCR) prices climbed 0.3% q-o-q, slowing from 0.8% growth in 1Q2023 and costs were in 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 price competition is a factor for four major RCR projects that will be launched in the 2Q2023 period -The Continuum, Blossoms by the Park, Tembusu Grand, Blossoms by the Park, The Continuum and The Reserve Residences which contributed to the drop in price within the RCR region. “In this secondary marketplace, sellers of homes are also facing opposition from buyers regarding price, as the market declined, but financing limitations remained restricted,” he adds.

Wong Xian Yang, head of research for Singapore and Southeast Asia at Cushman & Wakefield, states that the caveat is based on data from July 3 RCR new median prices for sales fell 5.8% q-o-q to $2,498 per square foot, down from $2,652 in the 1Q2023. He also notes that the majority of new projects launched were leasehold developments of 99 years that could have pushed the RCR prices down. In the first quarter of 2023 the new home sales of the RCR fueled through the leasehold Terra Hill, that saw homes sold for a the median price of $2,692 per square foot.

Based on 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 the research department for Southeast Asia at CBRE.

Song believes that the effect from the measures to cool down will “continue to resonate”. She explains that foreign buyers have cooled dramatically, 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 stabilize in the coming quarters. “Barring large-scale retrenchments or prolonged recessions or a major price decline, a significant correction is unlikely given the low inventory that is not sold and generally sound household balance books,” she continues. CBRE has maintained the private house price projection at 3% for 2023, which is down off from 8.6% growth chalked up in 2022.

Edmund Tie’s Lam however, reveals that despite the slower expansion across segments, the prices of homes not on land that are in CCR and OCR continue to rise. CCR as well as the OCR continue to see gains. “It is still too early to determine the point at which we will see the highest in the current market and we are expecting property prices to fluctuate over the next one to three quarters” Lam says.

Lam believes that any price hikes throughout the remainder of this year to be moderated due to forthcoming launches. He believes property prices will rise by up to 3% or 5% this year because of new private home sales of 77,000-88,000 units.