New Reporter
26-02-24, 13:36
More homeowners cash out as property prices peak
Median profit for private homes held for a “relatively short” holding period also doubled to S$247,000 since 2019
Feb 26, 2024
MORE private homeowners in Singapore sold their properties last year, as home prices appear to have peaked and the white-hot real estate market eased after successive rounds of cooling measures.
According to data crunched for The Business Times by real estate consultancy Cushman & Wakefield, the total number of deals for non-landed private homes, including executive condominiums, with a holding period of five years or less nearly quadrupled to 2,507 in 2023, from 681 in 2019.
The proportion of such deals over all resales and subsales with a prior purchase history also rose to 28.9 per cent in 2023, from 27 per cent in 2022 and 25.4 per cent in 2019.
Gross profits reaped on disposal of non-landed units within a five-year holding period also increased. The median profit grew 33.5 per cent to S$247,000 in 2023, from S$185,000 the previous year, and doubled from the S$123,241 recorded in 2019, Cushman & Wakefield found.
https://i.imgur.com/I1wLAc5.png
https://i.imgur.com/HvGnEtO.png
Gains rose in tandem with overall prices of private non-landed homes, which are up by a cumulative 32 per cent over the past five years, said Wong Xian Yang, head of research at Cushman & Wakefield.
The consultancy studied caveats for private non-landed homes with a prior purchase history that were transacted in the past five years, based on data from January 2012.
They then analysed if median profits for transactions with a relatively shorter holding period of five years or less declined as property price growth started to slow.
“Notably, given steep price increases, there were more sellers who cashed out earlier, as the proportion of deals with shorter holding periods increased,” Wong said.
Some may have done so anticipating weaker prices in the coming year, he said.
Others could be investors who are choosing to cash out as they face a “potential double whammy of increasing mortgage payments due to the progressive payment scheme and still-elevated interest rates”.
Rents have also weakened amid a slew of new completions in 2023, Wong pointed out.
Based on latest data from the Urban Redevelopment Authority, private home rents fell 2.1 per cent in Q4 2023. For the year, rents grew 8.7 per cent, significantly slower than the 29.7 per cent surge in 2022.
Fourth-quarter figures from URA show private home prices flattening out as well, growing 2.8 per cent for the quarter and 6.8 per cent for the whole of 2023. In comparison, prices increased by 8.6 per cent in 2022 and 10.6 per cent in 2021.
Furthermore, subsales hit an 11-year high in 2023, with 1,294 transactions in units held for short periods.
A subsale is recorded when a buyer resells a property bought directly from the developer, before the project is completed. Typically, a project takes less than five years to complete.
In the coming year, Wong said residential property deals with shorter holding periods of five years or less could continue to account for a higher proportion of resales and subsales, especially as interest rates remain relatively high.
“However, we could see this trend reverse slightly in 2025, as interest rates come down further and rents start to recover with lower supply expected over 2024 to 2026,” he said.
https://www.businesstimes.com.sg/property/more-homeowners-cash-out-property-prices-peak
Median profit for private homes held for a “relatively short” holding period also doubled to S$247,000 since 2019
Feb 26, 2024
MORE private homeowners in Singapore sold their properties last year, as home prices appear to have peaked and the white-hot real estate market eased after successive rounds of cooling measures.
According to data crunched for The Business Times by real estate consultancy Cushman & Wakefield, the total number of deals for non-landed private homes, including executive condominiums, with a holding period of five years or less nearly quadrupled to 2,507 in 2023, from 681 in 2019.
The proportion of such deals over all resales and subsales with a prior purchase history also rose to 28.9 per cent in 2023, from 27 per cent in 2022 and 25.4 per cent in 2019.
Gross profits reaped on disposal of non-landed units within a five-year holding period also increased. The median profit grew 33.5 per cent to S$247,000 in 2023, from S$185,000 the previous year, and doubled from the S$123,241 recorded in 2019, Cushman & Wakefield found.
https://i.imgur.com/I1wLAc5.png
https://i.imgur.com/HvGnEtO.png
Gains rose in tandem with overall prices of private non-landed homes, which are up by a cumulative 32 per cent over the past five years, said Wong Xian Yang, head of research at Cushman & Wakefield.
The consultancy studied caveats for private non-landed homes with a prior purchase history that were transacted in the past five years, based on data from January 2012.
They then analysed if median profits for transactions with a relatively shorter holding period of five years or less declined as property price growth started to slow.
“Notably, given steep price increases, there were more sellers who cashed out earlier, as the proportion of deals with shorter holding periods increased,” Wong said.
Some may have done so anticipating weaker prices in the coming year, he said.
Others could be investors who are choosing to cash out as they face a “potential double whammy of increasing mortgage payments due to the progressive payment scheme and still-elevated interest rates”.
Rents have also weakened amid a slew of new completions in 2023, Wong pointed out.
Based on latest data from the Urban Redevelopment Authority, private home rents fell 2.1 per cent in Q4 2023. For the year, rents grew 8.7 per cent, significantly slower than the 29.7 per cent surge in 2022.
Fourth-quarter figures from URA show private home prices flattening out as well, growing 2.8 per cent for the quarter and 6.8 per cent for the whole of 2023. In comparison, prices increased by 8.6 per cent in 2022 and 10.6 per cent in 2021.
Furthermore, subsales hit an 11-year high in 2023, with 1,294 transactions in units held for short periods.
A subsale is recorded when a buyer resells a property bought directly from the developer, before the project is completed. Typically, a project takes less than five years to complete.
In the coming year, Wong said residential property deals with shorter holding periods of five years or less could continue to account for a higher proportion of resales and subsales, especially as interest rates remain relatively high.
“However, we could see this trend reverse slightly in 2025, as interest rates come down further and rents start to recover with lower supply expected over 2024 to 2026,” he said.
https://www.businesstimes.com.sg/property/more-homeowners-cash-out-property-prices-peak