Singapore private home prices up just 0.2% in Q4 on sharp drop in sales

The number of private homes sold plunged 49 per cent in the fourth quarter of 2022 from the third quarter, and by about 60 per cent year on year. PHOTO: ST FILE

SINGAPORE – The growth in private home prices cooled to 0.2 per cent in the fourth quarter of 2022, as sales dropped sharply in the face of growing economic headwinds, two rounds of property curbs, and the absence of major new launches.

The 0.2 per cent price rise is the slowest quarterly growth since the first quarter of 2020, when prices shed 1 per cent. This compared with 3.8 per cent growth in the third quarter and a 3.5 per cent rise in the second quarter, according to data from the Urban Redevelopment Authority (URA) on Tuesday.

For the whole of 2022, private home prices grew 8.4 per cent, slowing from 2021’s 10.6 per cent rise.

The number of private homes sold plunged 49 per cent in the fourth quarter from the third quarter, and by about 60 per cent year on year. For the whole of 2022, sales fell by about 36 per cent compared with 2021.

In 2022, the landed market grew by 9.5 per cent, outperforming the non-landed market, which grew by 8 per cent.

In the fourth quarter alone, landed prices rose 0.5 per cent from the previous three months, after climbing 1.6 per cent in the third quarter.

Non-landed prices gained just 0.1 per cent after rising 4.4 per cent in the previous quarter, as prices for suburban homes fell 2.6 per cent following a 7.5 per cent increase in the previous quarter.

In the prime district, prices rose just 0.5 per cent, compared with a 2.3 per cent increase in the third quarter.

Prices in the city fringe gained 2.6 per cent, compared with the 2.8 per cent increase in the previous quarter, due to “owner-occupier and investment demand, and this submarket’s price and rental competitiveness compared to the prime district”, said Ms Chia Siew Chuin, head of residential research at JLL Singapore.

Meanwhile, the drop in suburban prices – after major launches AMO Residence and Lentor Modern hit new price benchmarks in the third quarter – shows the toll taken by higher interest rates and a slowdown in HDB resale price growth, Huttons Asia’s senior director of research Lee Sze Teck said.

Stringent total debt servicing ratio requirements under the latest cooling measures also pared the housing budgets of many suburban home buyers who tend to rely on significant bank financing, ERA Realty head of research and consultancy Nicholas Mak said.

For the full year, however, private non-landed homes in the suburbs outperformed those in the prime and city fringe areas, with a 9.3 per cent gain.

Prices in the prime area grew 4.6 per cent and those in the city fringe grew 9.2 per cent in 2022.

Mr Wong Xian Yang, Cushman & Wakefield’s head of Singapore research, noted that the private residential market could surprise on the upside in the first quarter of 2023, as developers push out new launches amid tight unsold inventory.

While the economic outlook has dimmed, the labour market remains tight, HDB resale prices are still rising, and unsold inventory remains significantly below the five-year average of 25,000 units, he said. “A robust rental market will also support holding power,” he added.

OrangeTee & Tie’s senior vice-president of research and analytics Christine Sun said private residential prices dropped because there was a higher proportion of resale transactions in the fourth quarter. “Resale homes are typically sold at lower prices than new homes,” she said.

Citing URA Realis data, Ms Sun noted that in the fourth quarter, sales of new private homes, excluding executive condominiums, sank 69.1 per cent to 666 units, from 2,157 units in the third quarter. In comparison, resales fell 36.4 per cent to 2,360 units from 3,710 units over the same period.

A significant drop in the number of units launched for sale in 2022 also contributed to the moderation in private residential prices, Mr Lee said.

“An estimated 500 to 600 units were launched for sale in the fourth quarter. This is the lowest quarterly launch volume since the first quarter of 2003, when 506 units were launched. For the full year, an estimated 4,500 to 4,600 units were launched – less than half of 2021’s launch volume,” he said.

Consequently, developer sales for the full year in 2022 are estimated to be around 7,300 units, down 44 per cent from sales in 2021, he added.

But new supply of between 11,000 and 12,000 units may be launched in 2023, and could appeal to buyers who have held back due to a lack of new launch options, said Mr Ismail Gafoor, chief executive of PropNex Realty.

About 10 projects could hit the market in the first quarter, including Sceneca Residence on Jan 14, TMW Maxwell, 8 Shenton Way, Lentor Hills Residences, The Botany @ Dairy Farm, and The Reserve Residences.

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