Singapore's private home prices up 0.4% in Q4 amid lower sales; price growth slows to 8.6% for 2022
While the prices of private residential properties grew at a slower pace in 2022, rentals of private homes surged 29.7 per cent.
SINGAPORE: Private home prices rose at a slower pace in the fourth quarter of 2022 amid lower sales due to a lack of major launches, cooling measures, rising interest rates and weaker global economic projections.
Prices of private residential properties rose 0.4 per cent in Q4 of 2022, compared with the 3.8 per cent in third quarter, according to real estate statistics released by the Urban Redevelopment Authority (URA) on Friday (Jan 27).
For the whole of 2022, private home prices rose 8.6 per cent, slowing from the 10.6 per cent increase in 2021.
The price decline is in sync with global trends where home prices have similarly slid in many countries, said OrangeTee & Tie’s senior vice president of research and analytics Christine Sun.
Home prices are taking a hit from rising interest rates globally, she said, adding that central banks worldwide have hiked interest rates to tame inflation.
Many countries are pushing up borrowing costs to guide their economies towards a soft landing, she added.
"Real estate will inevitably be affected as households tighten their belts, and rising interest rates hold back some potential buyers."
Ms Sun also noted that home values in Singapore are not facing as sharp a cooling as in many other countries.
"It is not surprising that some buyers in Singapore are starting to feel the impact of higher mortgage payments, considering how much interest rates have risen over the past year. However, most buyers can still service their loans now as they are not overleveraged since stringent property curbs are in place to ensure buyers remain prudent and our job growth is still healthy," she said.
Singapore introduced several property cooling measures on Sep 30, including a new 15-month wait-out period for private homeowners who sell their property prior to submitting an application to buy an HDB resale flat.
MUTED PRICE GROWTH IN Q4
Price growth was muted in the fourth quarter of last year as there were no major non-landed launches, said Mr Lee Sze Teck, senior director of research at Huttons Asia.
Prices of non-landed properties increased by 0.3 per cent in the fourth quarter of 2022, compared with the 4.4 per cent increase in the previous quarter.
Prices of non-landed properties in the Core Central Region (CCR) increased by 0.7 per cent in the fourth quarter of 2022, compared with the 2.3 per cent increase in the previous quarter.
Prices of non-landed properties in the Rest of Central Region (RCR) increased by 3.1 per cent while the Outside Central Region (OCR) decreased by 2.6 per cent in the fourth quarter of last year.
Landed property prices increased 0.6 per cent in the fourth quarter of 2022, compared with the 1.6 per cent increase the previous quarter.
SUPPLY AND DEMAND
Sales volume dipped in the fourth quarter of 2022 as most buyers were on an overseas vacation and sales activities slowdown during the seasonal holidays, said Ms Sun, adding that interest rate hikes, lack of launches during the year-end holidays and rising macroeconomic uncertainties have also dampened demand.
Sales dipped from 6,148 units in Q3 to 3,588 units in Q4 2022 excluding executive condominiums (ECs), with the sales dip observed for both new home sales and resales.
Resale transactions accounted for 75.1 per cent of all sale transactions in the fourth quarter. There were 2,694 resale transactions, compared with 3,719 units in the preceding three months.
New home sales excluding ECs, meanwhile dipped by 68.4 per cent from 2,187 units in Q3 2022 to 690 in Q4 2022.
For the whole of 2022, developers sold 7,099 private residential units, compared with the 13,027 units in the previous year.
This is the "lowest developers’ sales since the Global Financial Crisis in 2008," said Mr Lee.
Nevertheless, it is still a strong set of numbers considering that developers also launched the least number of units for sale in 2022, he said.
Developers had launched 504 uncompleted private residential units excluding ECs for sale in the fourth quarter of 2022, compared with the 1,455 units in the previous quarter, said URA.
For the entire year, developers launched 4,528 uncompleted private residential units in 2022, a decrease from the 10,496 units from the year before.
In total, about 32,100 units, including ECs, are expected to be completed in 2023 and 2024, which is around two times the 15,900 units completed in 2021 and 2022.
"This will help to cater to housing needs in the immediate term," URA said. "More supply with planning approval, totalling around 19,600 units as of the fourth quarter of 2022, will be completed beyond 2024."
There are also 16,961 units with planning approvals, including ECs, that remain unsold, compared to 17,737 units in the previous quarter, said URA.
The low number of unsold units and pent-up demand supported price growth in 2022, said Mr Lee.
RENTALS OF PRIVATE RESIDENTIAL PROPERTIES
Rentals of private homes posted an increase of 7.4 per cent in the fourth quarter, after rising 8.6 per cent in the previous quarter. It increased by 29.7 per cent for the whole of 2022.
Landed property rentals posted an increase of 6.3 per cent in the fourth quarter, after rising 10.9 per cent in the previous quarter. It increased by 28.1 per cent for the whole of 2022.
Rentals of non-landed properties in the CCR, RCR and OCR also increased in the fourth quarter. They increased 7.3 per cent, 7.3 per cent and 8.2 per cent respectively.
Ms Sun said that the leasing market performed well last year as rents hit a record high and volumes were higher than in the pre-pandemic period.
"Rents have been rising continuously for over two years as demand outstrips supply.
"In 2023, there will be a significant ramp-up in housing supply, with 19,291 new private homes, including ECs, slated for completion. The increased housing supply may ease some rental pressures, especially in the suburbs and city fringe areas," Ms Sun adds.
She expects rents to rise at a "slower pace of around 13 to 16 per cent this year."
The supply of new private homes will pick up in 2023 to an estimated 10,000 to 12,000 units spread over 40 launches, Mr Lee said.
The first launch of 2023, Sceneca Residence achieved a strong sales result on launch day, moving 60 per cent of its units.
"This strong result should dispel doubts about the strength of the market and set the tone for the upcoming launches in February and March 2023," he said.
Enquiries and viewings by Chinese buyers have also picked up over the last two weeks in January after China relaxed border controls, said Mr Lee, a sentiment echoed by Ms Sun who said that with the reopening of China’s borders, we "will likely see more Mainland Chinese buyers returning to Singapore".
Ms Sun added that foreign investors will continue to be attracted by Singapore's strong and stable currency, "which will help to preserve the value of their property investment in the long run".
"Nevertheless, housing affordability will be a key concern to most buyers. We expect buyers to stay prudent this year, given the rising interest rates, inflationary pressures, and global economic uncertainties.
"Interest rates may stay elevated as inflation is not expected to be transitory. Therefore, the net effect may see prices growing slower, between 5 and 8 per cent this year," she said.