Private home prices up 2.7% in Q4, taking full-year rise to 6.7%

The fourth quarter of 2023 witnessed an increase of 2.7 percent increase in the cost of residential property for private use in Singapore mostly due to the sale of new launches at benchmark prices, and lower volume of transactions.

The price index grew by 6.7 percent in the fourth quarter of 2018, lower than 8.6 percent in 2022, and 10.6 percent in 2021.

Tan Tee Khoon is the PropertyGuru Singapore Country Manager. He explained the price fluctuations between 2023 and 2024 indicate that the value of private homes has reached their high point.

Tricia Song is CBRE’s director of research for Singapore as well as South-east Asia. She said that prices for private homes have increased for seven consecutive years following the bottom achieved in the middle of 2017. The prices have increased by 32,3 percent from the low of Q1 2020.

Song stated that the bulk of the price hike in 2023 was due to the non-landed market in suburban areas. Prices increased 13.8 percent over the course of the year. The Outside Central Region’s (OCR) price hikes far over the Rest of Central Region’s (RCR) which saw prices increased by 2.7 percent, and most expensive Core Central Region prices (CCR) that were more expensive by 2.1 percent.

Prices for private condos in OCR increased by 4.6 percent from quarter to quarter (qoq) after an increase of 5.5 percent increase in the third quarter. The CCR’s prices increased just a little less than the CCR average of 4.2 percent. But, they did recover from the 2.7 percent decline that took place in during the prior quarter.

The fourth quarter of 2014 saw two launches launched at benchmark prices and both had astonishly large sales. CapitaLand’s J’Den located situated in Jurong East, sold 323 units at an average price of S$2,451 per square foot (psf) when it was launched. UOL and SingLand’s Watten House in Bukit Timah, sold 101 units, with an average of $3230 per square. foot.

Wong Xian Yang, Cushman and wakefield’s head of research, stated that both projects account for about half of the new sales in the respective segments (OCR and CCR) during the fourth quarter of.

RCR prices fell in value by 1.2 percent during Q4 following the rise of 2.1 percent in the previous quarter. Song stated that a few of the existing projects may have sold their remaining units at discounts. This could be the reason for the decline in the RCR Index. These include Liv @ MB at Mountbatten and Myra at Potong Pasir. One Pearl Bank Condo located in Outram is also sold out.

Analysts noted that the lower sales volumes for Q4 and the entire year, as well as slow price increases outside of the OCR resulted in a greater resistance of buyers to prices that are too high.

Wong, an analyst with Cushman & Wakefield analyst, said that prices for non-landed goods are at historic peak. This will remain for the next quarter, which is the end of Q4 2023. He noted that when compared to prices prior to the pandemic (Q4 2019), CCR RCR and OCR’s non-landed prices are rising by 11 percent 37 percent and 40 percent, respectively.

Knight Frank’s director of research Leonard Tay said that although the balance sheets of households were healthy, buyers “have been and will remain cautious” when it comes to their home choices.

Lee Sze Teck noted, however that Huttons Director of data analysis, Lee Sze Teck said the high sales during Q4’s launches are evidence of “ample availability of local buyers” as foreign buyers were not buying due to the rise in Additional Buyers Stamp Duty (ABSD) in April.

In the fourth quarter of 2004, Singaporeans permanent residents, Singaporeans and foreigners comprised 98.5 percent of the homeowners who bought homes privately.

Based on caveats data as of January. 2nd, 2024, the amount of foreign-owned purchases in Q4 2023 fell from 271 in Q1 2020 as compared to 62 in Q4 2023. Lee stated that this is the lowest level since December 2011, when ABSD was first introduced. ABSD was first implemented by the federal government.

The number of transactions fell throughout the course of the year. According to the most recent estimates from the Urban Redevelopment Authority on Tuesday 2 January, the total number of transactions for homes that were private was lower by 27 percent than the figures for Q3. This is equivalent to 3,800 units.

The total amount of units sold during the year was 18,510, which is a decrease of 15% from 21,890 in 2022. URA stated that this was the lowest annual volume of sales since the year 2016. The figure includes new sales, subsales and sales resales, however it excludes executive condominium units.

The final quarter of this year was a strong one for land-based properties. In the fourth quarter, the cost of homes that were landed increased in 4.5 percent, which reversed the drop of 3.6 percent during the previous quarter. In 2023, the average landed home cost increased 7.8 percent which is up from 9.6 percent in 2022.

Knight Frank’s Tay stated that the need for land that is freehold remains “evergreen” and “the most significant obstacle to successful deals will be the limited amount of inventory that is saleable”.

Ismail Gafoor is the chief executive director of PropNex Realty. He said that the 4.5 percent increase in price can be explained by the slight rise in detached house sales. The number of detached houses was 43 detached houses during the fourth quarter, as opposed to 39 in the previous quarter. The cost of detached homes also climbed by 16 percent in the last quarter, to S$1,714 for a square foot on the land. The report suggests that this could be a factor in reducing the lower cost of semi-detached homes and terraced homes.

Marcus Chu, CEO of ERA said that those who own land tend to be more likely to ask for more expensive prices and are less likely to sell. He added that more land transactions fell through due to sellers and buyers were not in agreement over price.

The analysts predict that prices will remain in a downward trend and fall between 3 and 5 percent over the course of the coming year.

Song who is a CBRE analyst, said that the current price hikes will keep a lid on the demand. She added that due to the increase in inventory, prices will continue to decline in 2024. Prices for homes “are likely to remain in a downward trend due to the resiliency of the household balance sheets and the low amount of inventory of unsold goods”.

Tay stated that the launch price will be “elevated” due to construction and land costs already agreed to.

PropNex’s Gafoor believes developers should price their units “more sensiblely” to increase sales during the weekend of launch.

Tay said that investors seeking capital preservation, appreciation and regular income as well as foreign and local are likely to stay away “until the interest rates reach their peak and stabilize, or decrease, and until there is more clarity regarding the outlook for the economy”.

He added: “History has shown, however, that investors who are who are familiar with Singapore’s residential market can quickly react to periods of low activity transform into periods of higher activity.”

Source: https://www.businesstimes.com.sg/property/private-home-prices-27-q4-taking-full-year-rise-67

With a slower market, Lentor Hills Residences interested buyers should ride on this market opportunity to enter the market at a reasonable price.

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