SINGAPORE’S private housing prices rose at their slowest quarterly pace in almost three years, as home sales slowed, supply expanded, and rents fell further in the first quarter of 2024.

Downward pressure on the private residential market is likely to continue in the coming months, as both home buying and rental demand moderate amid economic uncertainty, analysts said. 

Figures released by the Urban Redevelopment Authority on Friday (Apr 26) showed that the prices of private residential properties rose 1.4 per cent in the first quarter of 2024. This was a shade lower than the 1.5 per cent flash estimate by the agency earlier this month, and follows an increase of 2.8 per cent in the previous quarter. 

The 1.4 per cent rise is the slowest quarterly gain since Q3 2021, which had a 1.1 per cent increase, noted Lee Sze Teck, Huttons’ senior director of data analytics.

Rents fell 1.9 per cent in Q1, extending the 2.1 per cent decline in the prior quarter. 

Chia Siew Chuin, JLL head of residential research, research and consultancy, said the slower price growth reflects the cautious stance among homebuyers towards “lofty price levels amid slower wage growth and softer economic conditions”. 

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Private home prices have run up 34.3 per cent since the onset of the Covid pandemic, noted Tricia Song, CBRE head of research for Singapore and South-east Asia.

“There have been signs of increasing resistance to high price points amid higher interest rates and the punitive 60 per cent ABSD (additional buyers’ stamp duty) for foreigners effective late April 2023. This led to full-year 2023 developers’ sales coming in at 6,421 units, a 15-year low,” said Song. 

Unsold inventory of uncompleted units (excluding ECs) jumped 17.8 per cent in Q1 to 19,936 units, from 16,929 units in Q4 2023, added Song. Including completed units, unsold inventory rose 17 per cent to 20,204 units in Q1.

Landed properties led the rise in home prices in the first quarter of 2024, climbing 2.6 per cent from 4.6 per cent in the previous quarter.

Prices of non-landed properties rose 1 per cent in Q1, versus the 2.3 per cent rise in the previous quarter. 

Prime Core Central Region (CCR) prices drove price gains in Q1, rising 3.4 per cent. In comparison, the Rest of Central Region and Outside Central Region saw subdued gains of 0.3 per cent and 0.2 per cent, respectively. 

“The public launch of Watten House in the CCR appeared to have boosted sentiment in the segment, with existing projects such as Perfect Ten and Leedon Green seeing transactions at higher median prices,” said Song. 

Buying in the CCR could be moving prices to catch up with other regions. Between 2021 and 2023, CCR prices grew by about 11 per cent, starkly behind other regions where prices have risen over 30 per cent, said Cushman & Wakefield research head Wong Xian Yang.

Overall sales volume was down 2.4 per cent for the third straight quarter to 4,230 units in Q1. Resale deals fell 5 per cent to 2,689 units and sub-sales by 8.3 per cent to 377 units, added Wong.

The new sales market was the only one that improved, with volume up 6.6 per cent to 1,164 units in Q1, said Wong. This came as developers launched more private homes for sale, at 1,304 units excluding executive condominiums, from Q4’s 1,060 units. 

Still, the take-up of new launches slowed in Q1. New launches with more than 100 units had a take-up rate of around 39 per cent, compared to around 54 per cent one year ago, he said. 

This is also the lowest level of sales recorded in the first quarter of the year since Q1 2008, when 762 units were sold, pointed out PropNex chief executive Ismail Gafoor. 

Developers have also turned more conservative in bidding for land, and could be pricing new units at a more accessible level to appeal to local buyers, Gafoor said. In Q1, the median transacted price of new non-landed private homes (excluding ECs) was S$1.96 million, down from about S$2.15 million in the previous quarter, he said.

Easing rents

Rents, meanwhile, slipped 1.9 per cent in Q1, extending the 2.1 per cent decline in the prior quarter.

CBRE’s Song pointed to “abundant completions” in 2023. Excluding ECs, some 19,968 private homes were completed last year, the largest number of completions since 2016’s 20,803 units. 

In the first quarter of this year, only 241 units were completed, mainly at the 200-unit freehold Meyer Mansion in District 15. “Net completed stock actually shrunk by 188 units, probably due to the demolition of projects sold for redevelopment,” said Song. 

The vacancy rate consequently fell to 6.8 per cent as at end-Q1, from 8.1 per cent in Q4. 

In the remaining three quarters of 2024, 10,561 private homes, including ECs, are set to be ready, based on expected completion dates. Another 6,316 units are due to be completed in 2025.

Analysts expect rents to further ease in the coming months.

Rents may fall up to 5 per cent this year given the increase in housing stock, lower number of incoming expats and the budget constraints the existing tenant pool may have, said Alan Cheong, Savills Singapore executive director of research and consultancy.

Cushman & Wakefield’s Wong predicted rents may stabilise by next year since “new completions in 2025 and 2026 will fall to an average of about 6,691 units annually each”, much less than the decade-long average of 13,275 units. 

CBRE’s Song observed that rents are still 52 per cent above their last trough in Q3 2020. She expects CCR rents to fall farther with vacancy elevated and substantial completions in 2024.

Still, a healthy pipeline of new project launches should stimulate market activity and homebuying demand, said JLL’s Chia.