Private home prices drop 0.7% in Q3 as buyers opt for cheaper resale, new suburban condos

At its October launch, Meyer Blue in the east coast sold 50 per cent of its 226 units at an average price of $3,260 psf. PHOTO: UOL

SINGAPORE – Private residential property prices fell 0.7 per cent in the third quarter, reversing from 0.9 per cent growth in the second quarter, as buyers flocked to cheaper resale condos and new suburban private homes that were launched at lower prices compared with those in other submarkets.

The 0.7 per cent decline in the Urban Redevelopment Authority’s (URA) overall private home price index is the biggest quarterly decline since the first quarter of 2020 when prices shed 1 per cent, but an improvement from flash estimates of a 1.1 per cent drop.

Overall prices in the first three quarters of 2024 rose 1.6 per cent, significantly slower than the 3.9 per cent gain over the same period in 2023, according to URA data released on Oct 25.

Landed home prices fell 3.4 per cent in the third quarter after a 1.9 per cent increase in the preceding quarter.

Non-landed home prices rose 0.1 per cent in the third quarter, compared with a 0.6 per cent gain in the previous quarter.

Mr Mohan Sandrasegeran, head of research and data analytics at Singapore Realtors Inc, attributed the overall price drop to a moderation in demand for prime district homes, which saw fewer transactions priced at $10 million and above.

The prime district non-landed market shed 1.1 per cent, extending a 0.3 per cent drop in the previous quarter.

The price growth in the city fringe submarket moderated to 0.8 per cent in the third quarter from 1.6 per cent, and the suburban market remained unchanged, following a 0.2 per cent uptick in the previous quarter.

For the first nine months of 2024, only 33 per cent of major new projects with more than 100 units each, excluding ECs, managed to sell more than 50 per cent of their units in their launch month.

This compared with 43 per cent over the same period in 2023, Cushman & Wakefield research head Wong Xian Yang noted.

Also, the majority of new sales excluding executive condominiums (ECs) were lower-value homes in the suburbs, which saw transactions jump to 715 units in the third quarter, from 414 units in the second quarter, noted Ms Christine Sun, chief researcher and strategist at OrangeTee.

Similarly, in the resale market, most transactions were in the suburbs, accounting for 54.7 per cent or 2,113 units of the overall resale volume of 3,860 units in the third quarter, she said.

And for the first nine months of 2024, private resale transactions jumped to 10,351 units, up from 8,498 units in the same period in 2023, boosted mainly by HDB upgraders “taking advantage of gains from selling their HDB flats to move into private properties”, Mr Sandrasegeran said.

ERA Singapore chief executive Marcus Chu attributed stronger resale demand to the significant price gap between new non-landed and resale condos.

According to caveat data, the median per square foot price gap has narrowed to 31.6 per cent in the third quarter from 48.9 per cent a year ago, but still remains substantial, he said.

According to the URA, 1,284 uncompleted private homes, excluding executive condominiums, were launched for sale in the third quarter, up from 634 units in the previous quarter.

On a quarterly basis, new private home sales volume jumped to 1,160 units in the third quarter, from 725 units in the previous quarter.

While buyers continue to be selective amid a myriad of new launch options and have turned to more competitively priced secondary stock, there is strong pent-up demand for new launches, said Ms Tricia Song, head of research for South-east Asia at CBRE.

She pointed to healthy take-up rates for new projects launched after the September interest rate cut, which shows a recovery in sentiment.

“A more significant rebound in new developer sales, however, is likely to occur only in 2025 when there is more clarity on global economic conditions,” she added.

At its October launch, Meyer Blue in the East Coast area sold 50 per cent of its 226 units at an average price of $3,260 psf, while 84 per cent of Norwood Grand’s 348 units in Woodlands were sold at an average price of $2,067 psf.

New sale transaction volumes could pick up with a slew of fresh launches such as prime district condo Union Square Residences in Havelock Road, city-fringe project Nava Grove in Pine Grove and suburban condo Chuan Park, the first new launch in Lorong Chuan since 2012.

Even so, 2024 will likely post the poorest sales performance since 4,264 new sale transactions were lodged during the global financial crisis in 2008, said Mr Leonard Tay, Knight Frank Singapore’s head of research.

Meanwhile, the private rental market has turned a corner as rents increased for the first time in more than six months.

The URA rental index rebounded 0.8 per cent in the third quarter, following a 0.8 per cent drop in the second quarter and a 1.9 per cent drop in the first quarter.

But for the first nine months of 2024, overall rents fell 1.9 per cent – a stark contrast to the robust 11.1 per cent growth in the same period in 2023.

“Rents for smaller one- and two-bedroom units continue to be pressured as landlords have to adjust their expectations to keep these units occupied,” Mr Tay said.

“However, rents for three- and four-bedroom units remain supported due to fewer available units,” he added.

Ms Song believes that rents should continue easing in the fourth quarter of 2024.

But she said they are not likely to fall to pre-2022 levels, due to increased property taxes, higher mortgage payments from higher interest rates, as well as higher rental demand from downgraders serving their 15-month wait-out period before they can buy resale flats.

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