For the first time since Q2 2023, Singapore's private home prices fell 1.1% in Q3

Market observers do not anticipate any more corrections.

October 1, 2024

CONDOsingapore.com

In Q3, Singapore's private home prices dropped 1.1% for the first time in five quarters since the second quarter of 2023.

The residential price decline was the biggest since a 1.5% price decline in 2016. However, market observers do not anticipate a further correction and anticipate a price rebound in Q4 due to a number of upcoming new launches and declining interest rates.

In the prime Core Central Region (CCR), where prices fell 1.5%, continuing their 0.3% easing from the previous quarter, and in the landed property segment, where home prices fell 3.8%, reversing a 1.9% increase in Q2.



The absence of new launches at price points that caused the needle to move upward was the reason given by Leonard Tay, head of research at Knight Frank Singapore, for the Q3 price decline.

When final data is available on October 25, he said, the URA price index may see a smaller decline or even end the quarter flat after accounting for the most recent launch, 8@BT, which entered the market in the final two weeks of September.

During its launch weekend, the Upper Bukit Timah project in Bukit Sembawang sold 52.5% of its 158 units at an average price of S$2,719 per square foot (psf).

Following a 0.9% increase in Q2 flash estimates issued by the Urban Redevelopment Authority (URA) on Tuesday, October 1, the third quarter saw a decline in private housing prices.

Prices are up 1.1% so far this year, which is a moderate increase from the 3.9% growth in the first nine months of 2023 and the 8.2% increase from January to September of 2022.

Tay thought it was unexpected that landed home prices dropped 3.8% in Q3 after increasing 1.9% in Q2 and 2.6% in Q1.

The median price of landed homes islandwide increased from S$1,711 psf in Q1 to S$1,775 psf in Q2 and S$1,786 psf in Q3, he said, citing URA caveat data.

Given that landed home prices are seen to be sustained by Singaporeans' housing aspirations, Tay continued, "Perhaps this could be due to URA's methodology in the price index."

After increasing by 0.6% in the prior quarter and 1% in the first quarter, non-landed home prices decreased by 0.3%.

"The quarter-over-quarter decrease in CCR transactions in Q3 can be attributed to the higher base in the previous quarter, which was lifted by price adjustments on projects (in) Sentosa and Cuscaden Reserve, aside from the ongoing pressure from the Additional Buyer's Stamp Duty hike," stated Marcus Chu, CEO of ERA.

Following a 1.6% gain in the second quarter, prices in the rest of the Central Region increased by 0.2%. Prices in the suburban Outside Central Region decreased by 0.1% following a 0.2% increase in Q2.

The total number of transactions in Q3 was 4,372 units, which was 11% less than the 4,915 units sold in Q2 and 15.9% less than the 5,201 units sold during the same period last year.

According to Tricia Song, CBRE's head of research for South-east Asia, secondary sale volumes held up in Q3, indicating that there is still liquidity in the market, even though new home sales are still "in the doldrums."

"As the price differential between new launches and resale non-landed private homes remains substantial, buyer demand in the secondary market remained strong," stated Chu of ERA.

The average psf price difference between new and resale non-landed private homes was 39.2% in Q3 2024, according to ERA's analysis. This is still a significant difference, even though it has decreased from 52% a year earlier.

According to Christine Sun, chief researcher and strategist at OrangeTee Group, fewer private homes were sold for higher prices. According to her, the number of private homes sold for at least S$5 million fell from 273 units in Q2 2024 to 211 units in Q3 2024.

According to Chu, roughly 71.7% of new home sales in Q3 were for less than S$2.5 million. Of all new home transactions, 26.3% were for homes under S$1.5 million.

Wong Xian Yang, head of research for Cushman & Wakefield in Singapore and South-east Asia, predicts that prices will increase by 1 to 4% over the course of the year due to the robust demand for private housing upgrades. After increasing 2.3% in Q2, HDB resale prices increased 2.5% in Q3, according to flash data released on Tuesday, October 1.

"Given the low unsold inventory, strong household balance sheets, and still-low unemployment rate, a correction is not anticipated," Song of CBRE stated.

According to Mohan Sandrasegeran, head of research and data analytics at SRI, "market activity could see renewed momentum moving forward with a more favourable interest rate outlook now emerging and several new project launches expected in the coming months."