SINGAPORE – Several rounds of property cooling measures, coupled with higher borrowing costs and a weaker economic outlook, finally sent prices of private properties down 0.4 per cent, the first quarterly decline in three years.
Price momentum eased across all market segments in the second quarter, based on Urban Redevelopment Authority (URA) flash estimates released on Monday. The last decline was in the first quarter of 2020, when prices fell 1 per cent during the onset of the Covid-19 pandemic.
Year on year, prices rose 7.2 per cent from the second quarter of 2022 – the smallest increase since the 7.1 per cent in the second quarter of 2021, according to OrangeTee & Tie.
Quarter on quarter, transaction volume rose about 16 per cent to 4,762 units in the second quarter due to more private homes launched for sale. But on a year-on-year basis, volume fell by about 30 per cent from 6,811 units in the second quarter of 2022, based on flash data.
Overall private home prices fell by 0.4 per cent in the second quarter of 2023, after a 3.3 per cent gain in the previous quarter.
National Development Minister Desmond Lee said in a Facebook post on Monday: “We are continuing to see signs of moderation in the property market.”
He noted that the quarterly price drop in the private residential market comes after “several rounds of measures since December 2021, including the ABSD (additional buyer’s stamp duty) rate increases in April this year”.
Prices of non-landed properties dropped 0.5 per cent in the second quarter, following a 2.6 per cent gain in the first quarter.
Landed property prices saw their smallest gain in two years, up just 0.1 per cent after a 5.9 per cent jump in the first quarter.
Ms Tricia Song, CBRE’s head of research for South-east Asia, noted that foreigner buying has cooled quite significantly after ABSD rates for this group doubled to 60 per cent.
“The number of condos bought by non-PR foreigner buyers has fallen to 71 units in May from 113 units in April, making up just 4 per cent of total condo sales, from 7 per cent in Q1 2023 and Q4 2022,” she said.
Leading the overall decrease in non-landed prices is a 2.6 per cent drop in private property prices in the city fringe, following a 4.4 per cent gain in the first quarter.
Mr Wong Xian Yang, research head at Cushman & Wakefield, pointed out that the dominance of new 99-year leasehold sales in the second quarter weighed on city fringe prices.
Leasehold condos The Reserve Residences and Tembusu Grand accounted for about 61 per cent of new sales in the city fringe area. The Reserve Residences sold 596 units at a median transacted price of $2,474 psf, while Tembusu Grand sold 362 units at $2,462 psf, he said.
In contrast, Mr Wong noted that city fringe prices in the first quarter were led by freehold Terra Hill, which sold 93 units at a median transacted price of $2,692 psf and accounted for 38 per cent of this segment’s new sales. Freehold projects typically commanded a price premium over their leasehold counterparts.
Overall private home price growth this year could moderate between 2 per cent and 5 per cent, as unemployment rates remain low and resale HDB prices continue to rise, supporting upgrader demand, he said.
Mr Lam Chern Woon, head of research and consulting at Edmund Tie, said city fringe property prices “have risen disproportionately more than the other two segments over the past two years”.
Prices in the prime district rose just 0.3 per cent in the second quarter, compared with a 0.8 per cent gain in the first quarter, while prices in the suburbs gained 1.2 per cent, compared with a 1.9 per cent rise in the first three months.
Ms Chia Siew Chuin, JLL’s head of residential research, research and consultancy, said prime district homes continue to capture local buyers as the price gap between these homes and those in the city fringe has narrowed.
Prices of suburban properties continue to be supported by first-time local buyers who are not as affected by the cooling measures, and by ongoing sales at existing projects such as Sceneca Residence and The Botany at Dairy Farm, which set benchmark prices at above $2,000 psf, she added.
Despite robust take-up at several new launches, median transacted prices of new private homes contracted 1.9 per cent quarter on quarter, while those of resale condos gained 1.8 per cent, said Mr Nicholas Mak, chief research officer of Mogul.sg.
Mr Marcus Chu, chief executive of ERA Singapore, said resale condo demand helped fuel a 3.1 per cent rise in suburban property prices to $1,359 psf in the second quarter.
“As prime district and city fringe homes are out of reach for some homebuyers, suburban resale condos have become the logical upgrade,” he said.
Edmund Tie’s Mr Lam said: “It is too early to call the peak of the market cycle and we expect property prices to trade sideways for the next one to two quarters.
He added: “Price increases for the rest of this year are expected to be moderate as homebuyers are spoilt for choice amid the slew of upcoming launches.”
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