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

PRIVATE residential property prices in Singapore rose 2.7 per cent for the fourth quarter of 2023, pulled up by sales at new launches priced at fresh benchmarks amid low transaction volume.

The Q4 spurt lifted the price index from a 0.8 per cent increase in Q3, to end the year with a 6.7 per cent gain, easing from the 8.6 per cent increase in 2022 and 10.6 per cent rise in 2021. 

Tan Tee Khoon, PropertyGuru country manager for Singapore, pointed out that price fluctuations across 2023 suggest that private home prices have more or less peaked.

Still, this is the seventh straight year of growth for private home prices, after bottoming in mid-2017, said Tricia Song, head of research for Singapore and South-east Asia, CBRE. Prices are also up 32.3 per cent since the last trough in Q1 2020, she said. 

Much of 2023’s price rise was fuelled by the suburban non-landed market, where prices rose 13.8 per cent during the year, said Song. Outside Central Region (OCR) price gains far outpaced prices in the city fringe areas of the Rest of Central Region (RCR), which rose by 2.7 per cent, and prime Core Central Region (CCR) prices which were 2.1 per cent higher year on year.

Quarter on quarter (qoq), private condo prices in the OCR were up 4.6 per cent, following a 5.5 per cent increase in Q3. CCR prices rose slightly less, at 4.2 per cent in the fourth quarter but recovering from the previous quarter’s decline of 2.7 per cent.

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Two launches in particular chalked up unexpectedly strong sales when they were brought to market in the fourth quarter at benchmark prices. CapitaLand’s J’Den in Jurong East sold 323 units at launch at an average price of S$2,451 per square foot (psf), while UOL and SingLand’s Watten House in Bukit Timah moved 102 units at an average price of S$3,230 psf.  

The two projects drove around half of new sales in their respective OCR and CCR segments in Q4, said Cushman & Wakefield’s research head Wong Xian Yang. 

In the RCR, prices fell 1.2 per cent in Q4, after a 2.1 per cent increase in the previous quarter. Some existing projects may have cleared their last unsold units at a discount, contributing to the decline in the RCR index, said Song. These include Liv @ MB in Mountbatten, Myra in Potong Pasir, and One Pearl Bank condo in Outram, which are now fully sold. 

Lower sales volume in Q4 and for the year, as well as the slower price gains outside the OCR, showed increasing buyer resistance to already high prices, analysts said.

Cushman & Wakefield’s Wong noted that current non-landed price levels are at their historical peaks as at Q4 2023. “Compared with pre-pandemic levels (at Q4 2019), CCR, RCR and OCR non-landed prices are cumulatively up by 11 per cent, 37 per cent and 40 per cent, respectively,” he said. 

Although household balance sheets are healthy, “homebuyers have been and will continue to be circumspect in their housing decisions”, said Knight Frank head of research Leonard Tay.

However, Lee Sze Teck, Huttons senior director of data analytics, noted that the robust sales at the Q4 launches showed evidence of the “ample liquidity of local buyers”, as foreign buyers sat out following the hike in the Additional Buyer’s Stamp Duty (ABSD) last April.

In Q4, Singaporeans and permanent residents accounted for 98.5 per cent of private home buyers, while foreigners accounted for 1.5 per cent.

Based on caveats data as at Jan 2, 2024, purchases made by foreigners dropped to 62 in Q4 2023, compared with 271 in Q1 2023. It is also the lowest since the government first introduced ABSD in December 2011, said Lee. 

Transaction volume shrank during the year. Based on flash estimates released by the Urban Redevelopment Authority (URA) on Tuesday (Jan 2), the total sale transaction volume of private homes up to mid-December was 27 per cent lower than in Q3, falling to 3,800 units in Q4. 

This brought the full-year figure to 18,510 units, down 15 per cent from the 21,890 units sold in 2022. It is also the lowest annual sale transaction volume since 2016, said URA. The figure comprises new sales, resales and subsales, and excludes executive condo units.

Landed properties had a strong showing in the last quarter of the year. Landed home prices rose 4.5 per cent in Q4, reversing a 3.6 per cent decline in the previous quarter. For the whole of 2023, landed home prices were up 7.8 per cent, from 9.6 per cent in 2022. 

Demand for freehold landed homes remains “evergreen”, said Knight Frank’s Tay, and “the main obstacle to deals being successfully concluded will be the limited inventory of saleable stock”.

The 4.5 per cent price rise could be due to a slight increase in the number of detached house transactions, which stood at 43 units in Q4, from 39 in the previous quarter, said Ismail Gafoor, chief executive officer at PropNex Realty. The average price of a detached house also rose by around 16 per cent qoq to S$1,714 psf on land area. This may have mitigated weaker prices in the semi-detached and terrace house segments, he said.

Landed homeowners are also inclined to set higher prices and show little urgency to sell, said ERA’s chief executive officer Marcus Chu. More landed deals have fallen through as buyers and sellers hit an impasse on prices, he said.

Market analysts are looking at prices slowing further, to land in the range of 3 to 5 per cent in the coming year.  

CBRE’s Song noted that the current high prices would continue to deter demand. “With higher supply coming through, prices should slow down further in 2024,” she said. But home prices are “unlikely to correct significantly due to resilient household balance sheets and low unsold inventory”.

New-launch pricing is expected to remain “elevated”, due to already committed land and construction costs, said Tay.

PropNex’s Gafoor sees developers pricing units “more sensitively” in a bid to drive sales momentum at the launch weekend.

As Tay noted, investors eyeing capital preservation, appreciation, and recurring income – both locals and foreigners – are likely to stay sidelined “until interest rates peak, stabilise and perhaps reduce, and until there is more clarity in the economic outlook”.

“Nonetheless, history has shown that experienced investors familiar with Singapore’s private residential scene are quick to react when windows of subdued activity turn with the return of transactional activity,” he said.