J’den achieved a benchmark price for a new launch condo in the Jurong Lake District area, moving 327 units at $2,475 psf. (Picture: Samuel Isaac Chua/The Edge Singapore)
The private residential price index climbed 2.7% q-o-q last quarter, contributing to a 6.7% growth in the private residential price index for the whole of 2023. In comparison, 2022 saw private residential prices rise by 8.6%.
Sales transactions from new launches helped to drive up private home prices in 4Q2023, despite a more muted private housing demand as transaction volumes fell 27% q-o-q last quarter. Overall sales transaction volume in the private market fell by 15% y-o-y in 2023 compared to the year before.
Lee Sze Teck, senior director of data analytics at Huttons Asia, observes that the private residential market still ended 2023 on a “strong note” and the sales of three notable new projects in 4Q2023 – Hilllock Green, J’den, and Watten House – demonstrate the ample liquidity of local buyers.
Get the latest details on available units and prices for J'den
Sales from these three new projects accounted for more than 50% of the estimated developer sales of 1,107 units in 4Q2023. Moreover, data from Huttons Asia indicates that locals and Singapore permanent residents made up 98.5% of all private housing purchases last quarter, with foreigners accounting for the remaining 1.5%.
Based on URA caveats, J’den was the best-selling new launch project last quarter in terms of number of units sold. The 368-unit development, next of Jurong East MRT interchange, sold 327 units at a benchmark price of $2,475 psf. Meanwhile, Hillock Green along Lentor Central moved 132 units at an average price of $2,123 psf.
Hillock Green is the latest project to add to the Lentor neighbourhood, and it sold 132 units at $2,123 psf. (Picture: Samuel Isaac Chua/The Edge Singapore)
Watten House became the best-selling new project in the Core Central Region since Jervois Mansion in 2021, selling 114 units at an average price of $3,198 psf. The 180-unit, freehold Watten House on Shelford Road was previewed on Nov 18. The developer, a joint venture between UOL Group and Singapore Land Group, is targeting to officially launch the project sometime in 1Q2024.
Looking back to 2023, Marcus Chu, CEO of ERA Realty, says the April hike in ABSD was a curveball for the real estate sector in 2023. Still, the residential sector may have found its footing with the gradual return of local buyers in 4Q2023 and could forge ahead towards a more promising outlook.
Further price moderation in the private housing market could be on the cards this year, as the pipeline supply from the Government Land Sales (GLS) programme periodically enters the market. Last year, the sites on the GLS Confirmed List yielded 9,250 units, an increase of about 50% from the 6,290 units the government released in 2022.
The 1H2024 GLS programme will inject a further 5,450 units into the market. It is the highest supply of private housing on the Confirmed List in a single GLS programme since 2H2013. It will take about a year for the wave of new private housing supply to be ready for sales launch, after developers successfully bid of the various sites.
Read also: Former Tang Dynasty City site in Jurong East earmarked for future homes
Lee says that developers have displayed confidence in the market with higher bids for GLS sites in good locations. He forecasts that developers could sell 7,000 to 8,000 new units this year and private residential prices could increase 3% to 5% this year.
The secondary market continued to be a strong pull for many homebuyers in 2023, and Chu says that the surge in new home completion in the upcoming months will support resale price growth and demand. ERA expects resale private home prices to increase by up to 6% y-o-y this year, with total resale transaction volumes of 12,000 to 13,000 units sold.
Source: URA
In general, the private residential property market looks to be on a path towards stability as demand moderates and supply catches up, says Leonard Tay, head of research for Knight Frank Singapore. “Incoming housing supply… in the year ahead would lead to more moderte price growth. Nevertheless, private home prices in the new launch market are expected to remain elevated due to committed land costs and high construction costs,” says Tay.
This could result in a two-tier pricing situation between the primary (new sales) and secondary (resale) markets that may widen further this year, he says. Knight Franks expects private home prices to increase by 3% to 5% in 2024.
URA cautions that domestic mortgage rates are expected to remain at elevated levels, adding: “Households should continue to exercise prudence when taking on new financial commitments including long-term mortgage debt servicing obligations”.
According to a research note by Barclays Bank Singapore, the odds of new property cooling measures this year will be on the rise if price pressures reignite, and the government will not hesitate to intervene especially as more housing supply is delivered, says Brian Tan, senior regional economist at Barclays.
Read also: Final units at Perfect Ten and Pasir Ris 8 sold
“The jump in private prices – even if mainly driven by new launches – could easily reignite sentiment among property investors, leading to a revival in secondary market price pressures. A relatively swift response would likely be needed to cement the government's credibility among property investors in its aim of ensuring that property price developments do not move out of sync with economic fundamentals,” says Tan.
He adds that there is scope of the Total Debt Servicing Ratio (TDSR) to be adjusted lower from its current rate of 55%, while the ABSD could be hiked for locals and PRs purchasing their second and subsequent property.
Buyers will be keeping watch on the interest rate environment given the slew of launch-ready projects lined up this year. According to Lee, there may be up to 38 new projects with an estimated 11,590 units launching this year.
In the first three months of this year, there will be 12 new project launches – Ardor Residence, Hillhaven, Lentoria, Lumina Grand (EC), The Arcady at Boon Keng and The Hillshore are slated for launch before the Lunar New Year. Meanwhile, Jansen House, Koon Seng House, Lentor Mansion, Marina View Residences, SORA, and The Hill @one-north are slated for launch later this quarter.
The combination of relatively subdued sales in 2023 and a stronger pipeline of new launches this year could encourage many developers to price new units more sensitively in a bid to drive sales momentum at launch weekends, says Ismail Gafoor, CEO of PropNex Realty.
In 2024, local and foreign residential investors purchasing for capital preservation, appreciation, and recurring income, will likely remain on the sidelines until interest rates peak, stabilise and perhaps reduce, and until there is more clarity in the economic outlook, says Tay of Knight Frank.
Check out the latest listings for J'den, Hillock Green, Watten House properties