SINGAPORE – Private home prices rebounded 0.5 per cent in the third quarter, reversing a 0.2 per cent drop in the previous quarter, as demand from local buyers fuelled price gains in the city fringe and the suburbs.
Between July and September, new launches in the city fringe and the suburbs accounted for a higher proportion of new home sales and contributed to the price rebound.
Prices of non-landed homes rose by 2.1 per cent, after a 0.6 per cent drop in the previous quarter, according to Urban Redevelopment Authority (URA) flash estimates released on Monday.
But some property analysts questioned if the rebound was sustainable in the face of higher-for-longer interest rates, more upcoming launches and shrinking transaction volumes in the third quarter. The number of units sold fell by 15 per cent compared with the second quarter, and about 26 per cent year on year.
Mr Lam Chern Woon, head of research and consulting at real estate consultancy Edmund Tie, said that as buyer fatigue and resistance to high prices set in, take-up rates of most new launches dropped to between 30 per cent and 50 per cent in the third quarter, from between 40 per cent and 60 per cent in the previous quarter.
“More buyers are watching to see if the price momentum can be sustained. The juxtaposition of a gradual price increase and a decline in transaction volume in the third quarter does, however, raise doubts about the sustainability of price increases,” he said.
Ms Tricia Song, head of research for Singapore and South-east Asia at real estate company CBRE, said that despite more new launches and newly launched units, just 1,905 new private homes – excluding executive condominiums – were sold in the third quarter. This is down 10.4 per cent from the 2,127 units sold in the previous quarter.
She cited weaker economic conditions and buyers becoming selective with the increase in new supply. “Pent-up demand has been mostly absorbed and genuine buyers are spoilt for choice,” she said.
Despite the 0.5 per cent overall price rebound, Ms Christine Sun, senior vice-president for research and analytics at real estate agency OrangeTee & Tie, noted that this was less than the average price growth of 2.1 per cent over the past three years.
“Interest rates are staying higher and for longer than markets had anticipated. Home owners face steeper monthly payments amid higher costs of living,” she said.
Ms Sun added that markets may continue facing pushback against higher prices as more banks raise mortgage rates for floating packages to above 4 per cent.
Even so, real estate agency PropNex’s chief executive Ismail Gafoor does not expect significant price cuts “as developers have to contend with rising costs and are affected by a new rule on gross floor area definitions that will eat into their saleable space”.
Year on year, private home prices grew at a slower pace of 3.6 per cent in the first nine months of 2023. This is compared with the 8.2 per cent growth over the same period in 2022, and 5.3 per cent in the first nine months of 2021.
Meanwhile, URA’s flash estimates showed landed property prices fell 4.9 per cent in the third quarter, reversing a 1.1 per cent gain in the previous quarter. This is the largest quarterly drop since the first quarter of 2009, when landed home prices fell 9.2 per cent quarter on quarter, Ms Song said.
In the non-landed segment, prices of suburban private homes rose by 5.1 per cent, compared with a 1.2 per cent growth in the previous quarter. Prices of non-landed private homes in the city fringe climbed 2.3 per cent, reversing a 2.5 per cent drop in the second quarter.
This was because most new launches in the third quarter were in these sub-markets, including Lentor Hills Residences, The Myst, The LakeGarden Residences and The Arden in the suburbs, and Grand Dunman and Pinetree Hill in the city fringe.
Mr Wong Xian Yang, head of research for Singapore and South-east Asia at real estate services firm Cushman & Wakefield, said median new home prices in the suburbs inched up to $2,080 per sq ft (psf) in the third quarter, from $2,025 psf. Resale home prices in the suburbs rose by 1.2 per cent quarter on quarter even as resale volumes dropped, he added.
“The jump in suburban prices is likely to be one-off, as buyers are getting price-sensitive. While developers won’t lower prices significantly, given low unsold stock and high development costs, new launches are likely to be priced competitively amid a bigger new launch pipeline,” he said.
In contrast, prices in the prime district fell 2.6 per cent in the third quarter, extending a loss of 0.1 per cent in the previous quarter.
Mr Lam of Edmund Tie said this suggests that the doubling of the additional buyer’s stamp duty rate to 60 per cent for foreigners and investors continues to bite, while a high-profile money-laundering probe with $2.4 billion worth of assets and cash seized has also dampened sentiment.
Ms Chia Siew Chuin, head of residential research at real estate consultancy JLL Singapore, said total private home sales in the prime district dived 32.6 per cent quarter on quarter to 683 units in the third quarter.
“Foreigners’ demand for these homes also plummeted by a staggering 63.7 per cent to 37 units in the third quarter, from 102 units in the second quarter,” she noted.
Ms Chia said overall transaction volumes in October and November should be supported by new launches, including Watten House in Bukit Timah, The Hill @ One-North, Hillock Green in Lentor Central, and J’Den, the redeveloped JCube in Jurong East.
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