RHB Research expects the Singapore residential property market to see more downward pressure on prices for the fourth quarter of 2023 and Q1 2024. This comes on the back of increasing supply and buyers having more choices during weaker demand times.

Urban Redevelopment Authority flash estimates for Q3 2023 showed private residential prices edging up by 0.5 per cent on a quarterly basis, reversing the decline of 0.2 per cent in Q2.

Overall, prices of landed homes and prime-area private condo units as well as apartments fell 4.9 per cent and 2.6 per cent, respectively, in Q3 2023 over the previous quarter.

The slight increase in overall private home prices came with lower sales volume during the quarter – a sign of price resistances and buyers’ fatigue amid the “sluggish” macroeconomic conditions and perpetual high interest rates, said RHB’s analyst Vijay Natarajan on Monday (Oct 2).

The Q3 price increase was led by the mass market segment, which increased 5.1 per cent quarter on quarter (qoq). This was driven by strong sales at Lentor Hill Residences, said RHB.

The mid-tier segment jumped 2.3 per cent qoq, while the high-end segment fell 2.6 per cent. This was largely due to the impact of the cooling measures announced in April, the report showed.

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“We expect a slight moderation to flattish growth for Q3 when the final data is published later this month,” said Natarajan.

“This will include transactions for the second half of September which were relatively muted, based on our observations”, he added.

Total new take-ups at launches were 4,569 residential units, a 15 per decline compared to Q2 and 26 per cent down from a year ago.

With 11 new launches expected in Q4 at 2,534 units, the research house expects this additional supply to add on to the unsold units from recent launches.

“We expect take-up rates to ease 20 per cent to 30 per cent levels over the launch weekends vis-a-vis the 50 per cent to 70 per cent seen earlier this year,” said Natarajan.

With the increase in supply, competition will heat up. RHB said it anticipates developers of selective projects, particularly those in the high-end segment, to start dangling “soft discounts” to move inventory.

Noting the slowing market momentum and the rise in government land sales supply, the research house expects softer land bids by developers, which should contain the upward trajectory of prices in the next few quarters.

RHB forecasted full-year price growth of between 1 per cent and 3 per cent for 2023. For 2024, RHB predicted price growth to be at 0 per cent to 2 per cent, with a weaker first half.

The number of primary market transactions is expected to be between 7,000 and 7,500 units in 2023. Resale volumes are expected to drop 10 per cent to 30 per cent year on year, added RHB.