Private housing prices down 0.2% q-o-q in 2Q2023, first decline since 1Q2020

/ EdgeProp Singapore |

July 28, 2023 3:05 PM SGT

Private residential prices saw a slight decline of 0.2% q-o-q in 2Q2023, reversing from the 3.3% growth charted the previous quarter, according to data released by URA on July 28 (Picture: Samuel Isaac Chua/The Edge Singapore)

SINGAPORE (EDGEPROP) - Private residential prices saw a slight decline of 0.2% q-o-q in 2Q2023, reversing from the 3.3% growth charted the previous quarter, according to data released by URA on July 28. This is the first decline since 1Q2020, when prices dipped 1% q-o-q following the onset of the Covid-19 pandemic.

As such, the decline broke a streak of 12 consecutive quarters of growth in private property prices, notes Eugene Lim, key executive office at ERA Realty Network. “These indicators suggest that property prices are beginning to exhibit signs of moderation after three rounds of cooling measures since late 2021 coupled with a high-interest rate environment,” he comments.

Christine Sun, senior vice president of research and analytics at OrangeTee & Tie, adds that other contributors to the fall include an increase in private home completions, which has placed more pressure on sellers. “The stock of completed private residential units (excluding executive condominiums or ECs) has increased by 4,227 units in 2Q2023, up from an increase of 2,864 units in the previous quarter,” she points out.

The fall in private housing prices was underpinned by slower performance across both the non-landed and landed segments. In 2Q2023, prices of non-landed properties fell 0.6% q-o-q after charting 2.6% q-o-q growth in 1Q2023, while prices of landed properties rose 1.1% q-o-q last quarter, significantly moderating from the 5.9% increase in 1Q2023.

RCR sees biggest fall

For non-landed properties, the decline in prices was led by the Rest of Central Region (RCR), where prices fell 2.5% q-o-q in 2Q2023, following a 4.4% increase in 1Q2023. “This could be attributed to new projects such as Riviere, Piccadilly Grand and Amber Park clearing their last few units in the quarter, resulting in lower median prices,” notes Tricia Song, head of research, Southeast Asia at CBRE.

She further highlights that new RCR projects launched during the quarter such as Tembusu Grand, The Reserve Residences and Blossoms by the Park could have competed with older stock and tempered price expectations in the secondary market.

The Reserves Residences was the best-selling new project last quarter, with 590 units sold at a median price of $2,473 psf. Tembusu Grand was second with 362 units moved at a median price of $2,463 psf.

Top 10 best-selling new developer sales projects (excluding ECs) for Q2 2023 (ranked in descending order by number of units sold in the quarter)

Top 10 best-selling new developer sales projects - EDGEPROP SINGAPORE

In the Core Central Region (CCR), prices dipped by 0.1% q-o-q in 2Q2023, compared to an 0.8% increase in the previous quarter. This is a reversal from flash estimates released on July 3, which indicated a 0.3% q-o-q increase. “The CCR market, which has a larger foreign buyer pool, was more affected following the latest round of cooling measures,” remarks Wong Xian Yang, head of research for Singapore and Southeast Asia at Cushman & Wakefield. The CCR saw a quarterly decrease in sales volume of 8.8% to 995 units.

In the Outside Central Region (OCR), prices rose by 1.2% q-o-q in 2Q2023, moderating from the 1.9% rise in 1Q2023. The decline stems from lower transaction volume, which fell 8.2% q-o-q to 1,779 units. This comes off the back of a dearth of new launches, with only 40 units launched for sale in the OCR last quarter.

On the landed segment, Wong notes that while price growth has moderated, it continues to climb, backed by a stable labour market and growing demand, especially from owner-occupiers, amid rising affluence and a preference for larger living spaces.

ERA’ Lim concurs. “As the most prestigious asset class known for its high quantum deals and rare status, sellers are not willing to cut price while buyers are cautious with over paying. As a result, prices for landed homes rose but transaction volumes dropped 11.7% q-o-q, with only 286 homes being sold,” he comments.

With the 2Q2023 data, this brings overall private property prices up by 3.1% as of 1H2023. A total of 9,509 private homes were transacted in the first half of the year, 21.8% lower than 1H2022. “Buyers are increasingly price-sensitive and selective with more options of new launches in the pipeline,” says Wong.

The Reserve Residences - EDGEPROP SINGAPORE

The Reserve Residences was the best-selling project in 2Q2023 (Picture: Samuel Isaac CHua/The Edge Singapore)

Rents still climbing, but at slower pace

In 2Q2023, private residential rents continued to grow for an 11th consecutive quarter, albeit at a slower pace. Rents for private homes rose 2.8% q-o-q, significantly lower than the 7.2% increase in 1Q2023. “This is the slowest quarterly growth in rents since 4Q2021,” notes Huttons’ Lee.

He add that all segments of the residential market saw a significantly lower increase in rents. Rents for non-landed properties increased 2.3% q-o-q in 2Q2023, versus 6.2% growth in 1Q2023. The CCR, RCR and OCR saw rents increase by 2%, 2% and 2.9% respectively. For landed properties, rents rose 6.7% in 2Q2023, more than halving from the 14.5% growth logged in 1Q2023.

The more moderate rental growth follows an influx of supply. There were 4,401 private residential units completed in 2Q2023, 48.4% higher than 1Q2023. With completions continuing to outstrip demand, vacancy rates for private rental properties increased to 6.3% in 2Q2023 from 6.0% in Q1 2023,” notes CBRE’s Song. She expects rents to ease further moving forward alongside abundant new supply in the coming quarters. “Expatriate demand could moderate as companies restructure and cut back on hiring amid challenging economic conditions,” she adds.

Pick-up in new launches to boost new home sales

In the coming months, increasing launch activity is anticipated to support new home sales. “July is set to be a blockbuster month, with at least 1,108 units already sold across four new launches opening in the weekends of 8 - 9 and 15-16 July,” says Song.

ERA’s Lim expects new home sales for the full year to exceed the 7,099 units sold by developers last year. “The number of new sale units in 2023 to date (July) were already 65% of 2022’s numbers,” he points out. An expected 4,625 new homes will be released to the market in 2H2023.

OrangeTee & Tie’s Sun believes private property prices will continue to stabilise, as more housing supply comes onstream. “[Full-year price growth] could be slower at around 4 to 6%, compared to 8.6% in 2022 and 10.6% in 2021,” she estimates.

Cushman & Wakefield’s Wong agrees, noting that the cooling measures and tempered economic growth, coupled with higher levels of new completions, should keep price growth between 2% to 5% for 2023. “Unemployment rates are expected to remain low, and rising resale HDB prices (+1.5% q-o-q in 2Q2023 vs +1.0% q-o-q in 1Q2023) should support upgrader demand for private properties,” he says.