Singapore’s Private Housing Market: A Comprehensive Analysis for 3Q2023

, ,

The Hillshore developer

Introduction: A Snapshot of the Current Real Estate Landscape

In the ever-evolving landscape of Singapore’s real estate market, the third quarter of 2023 has presented a unique set of trends and patterns. The Urban Redevelopment Authority (URA) released data on October 27, revealing a nuanced picture of the private housing sector. This in-depth analysis aims to dissect these trends, offering insights into what they mean for investors, homeowners, and the market at large.

The Hillshore developer took the visionary step of acquiring a collective sale, injecting a sum of $70.3 million.

Private Housing Prices: A Quarter of Subtle Growth The third quarter of 2023 saw private housing prices in Singapore rise by 0.8% quarter-on-quarter, marking a reversal from the 0.2% decline observed in the previous quarter. This increase, though modest, is slightly higher than the initial 0.5% rise projected in URA’s early estimates.

Year-to-Date Performance: Comparing 2023 to 2022 When we look at the bigger picture, the first nine months of 2023 witnessed a 3.9% increase in private housing prices. This rate, however, pales in comparison to the 8.2% surge seen over the same period in 2022. The average quarterly growth in 2023 also lagged behind the previous year’s average of 2.1%.

Expert Insights: Understanding Market Stabilization Leonard Tay, Knight Frank Singapore’s head of research, offers a perspective on these numbers. He suggests that the market is finding its equilibrium, with demand and supply beginning to balance out. Tay predicts that this trend of cautious buying will likely continue into 2024.

Non-Landed Segment: Leading the Price Growth The non-landed segment of private housing was the primary driver of the price increase in 3Q2023, showing a 2.2% rise. This is a significant rebound from the 0.6% year-on-year decline seen in the previous quarter.

Regional Breakdown: OCR vs. RCR vs. CCR

  • Outside Central Region (OCR): The OCR led the charge with a notable 5.5% quarter-on-quarter increase, a jump from the 1.2% rise in 2Q2023.
  • Rest of Central Region (RCR): Following closely, the RCR saw prices climb by 2.1%, overturning a 2.5% decline from the previous quarter.
  • Core Central Region (CCR): In contrast, the CCR experienced a 2.7% drop, continuing a downward trend from 2Q2023.

Market Dynamics: Local Demand and Developer Strategies Chia Siew Chuin of JLL highlights the role of local resident home-buyers in supporting demand. She also notes that higher price levels in 3Q2023 were influenced by new project launches, where developers faced steeper land and development costs.

Landed Properties: A Different Story The landed property segment didn’t mirror the growth of its non-landed counterpart. Prices fell by 3.6% quarter-on-quarter in 3Q2023, marking the first decline since 2Q2021. Ismail Gafoor, CEO of PropNex Realty, points out that despite this drop, landed home prices have risen by 3.2% in the first nine months of 2023, although this is significantly lower than the 9% growth in the same period of 2022.

Private Home Sales Volume: A Declining Trend The sales volume of new private homes (excluding executive condominiums) fell by 8.5% quarter-on-quarter in 3Q2023, with a year-on-year decrease of 11%. This decline is notable, especially considering the 61.3% increase in the number of units launched.

The Resale Market: A Slight Softening The private resale market also saw a dip, with 2,900 units changing hands in 3Q2023, a 2.6% decrease from 2Q2023. However, the number of sub-sale transactions rose from 285 units in 2Q2023 to 355 units in 3Q2023.

Buyer Sentiment: Caution Amidst Economic Uncertainty Chia from JLL observes that the dip in sales volume reflects a more cautious approach from buyers, influenced by the uncertain economic outlook and new market cooling measures. In the primary market, buyers are becoming more selective, while high interest rates and limited resale stock are impacting the secondary market.

Unsold Inventory: A Decrease in Numbers The total unsold inventory in the private housing market fell by 4.3% quarter-on-quarter to 17,161 units in 3Q2023.

Rental Market: Slowing Growth Momentum The rental market for private housing saw a 0.8% quarter-on-quarter increase in 3Q2023, marking the fourth consecutive quarter of slowing growth. This is the first time in 11 quarters that islandwide rents have recorded a growth below 1%.

Rental Growth by Property Type

  • Landed Properties: Experienced a 4.4% rise in rents.
  • Non-Landed Properties: Observed a more modest 0.2% increase.
  • Regional Differences: RCR and OCR rents rose by 1.9% and 1.3%, respectively, while CCR rents declined by 1.7%.

Year-to-Date Rental Trends For the first nine months of 2023, rents have climbed by 11.1%, and they are up 58.5% since bottoming out in 3Q2020.

Vacancy Rates and Completions: An Overview Tricia Song of CBRE notes that the vacancy rate for private homes rose to 8.4% in 3Q2023, up from 6.3% in 2Q2023. The first nine months of the year saw the completion of 15,883 private homes (excluding ECs), with a total of 19,050 units expected to be completed by the end of 2023.

Future Rental Market Predictions Song anticipates further easing of rents in the coming quarters, influenced by a significant new supply and potentially moderating expatriate demand due to economic challenges.

Market Headwinds: Factors Influencing Future Trends Wong Xian Yang of Cushman & Wakefield highlights several factors that will continue to impact the market, including cooling measures, economic outlook, and interest rates. He predicts a mismatch in buyer-seller expectations, which could affect overall sales volumes.

New Launches and Market Sentiment Despite new launches like J’den and Hillock Green, the cautious sentiment and macroeconomic uncertainties may dampen sales activity. PropNex’s Gafoor suggests that buyers might be waiting for market catalysts or considering opportunistic buys, particularly in the CCR segment.

Sales Volume Projections: A Downward Revision PropNex has revised its sales volume projections for 2023 downwards, anticipating 6,500 to 7,000 new home sales (excluding ECs) and 12,000 to 13,000 units for private resale properties.

Price Growth Expectations For 2023, Gafoor expects private home price growth to be between 4% to 5%.

Developer Strategies and Market Outlook CBRE’s Song believes some developers may delay new project launches to 2024, expecting subdued sales in 4Q2023. She predicts that between 6,500 to 7,000 new private homes will be sold in 2023, below the 7,099 units recorded in 2022.

Price Peak and Future Corrections Song also suggests that private home prices may have peaked, with growth expected to be muted in 4Q2023. However, barring major economic downturns, a significant price correction is not anticipated, given the low unsold inventory and healthy household balance sheets.

Economic Forecasts and Real Estate Implications The Ministry of Trade and Industry forecasts GDP growth between 0.5% and 1.5% for 2023, down from 3.6% in 2022. CBRE maintains its full-year forecast of 3% price growth in 2023, easing from the 8.6% growth in 2022.

Conclusion: Navigating the Evolving Real Estate Market As we move towards the end of 2023, the Singapore private housing market presents a complex picture. With various factors at play, from economic conditions to supply dynamics, stakeholders in the real estate sector must navigate these trends with informed strategies and a keen eye on the evolving landscape.

1 reply

Trackbacks & Pingbacks

  1. […] Read more: Singapore’s Private Housing Market: A Comprehensive Analysis for 3Q2023 […]

Comments are closed.