Singapore private home prices fall for first time in three years: URA flash estimates

SINGAPORE: Private home prices in Singapore fell for the first time in three years, dropping by 0.4 per cent in the second quarter of 2023, according to flash estimates released by the Urban Redevelopment Authority (URA) on Monday (Jul 3).

This is the first quarterly decrease in prices since the first quarter of 2020 as price momentum eased across all market segments, said URA.

On a quarter-on-quarter basis, the index fell by 0.4 per cent in the second quarter following a 3.3 per cent gain in the previous quarter.

The fall in prices comes after several rounds of property cooling measures since December 2021, including the latest increase in additional buyer’s stamp duty (ABSD) which was implemented in April.

"We will continue to keep a close watch on the property market, and adjust our policies as necessary," said Minister for National Development Desmond Lee in a Facebook post on Monday.

He said that the government has continued to increase housing supply to meet the demand and the Confirmed List supply for private housing, at around 9,250 units for 2023, stands at the highest level in a decade.

The "surprise decline" in property prices could be due to developers pricing their launches sensitively with affordability in mind after the cooling measures, said Mark Yip, CEO of Huttons Asia. He also noted that there were slightly fewer high-profile deals above S$10 million (US$7.4 million) after the cooling measures.

Christine Sun, OrangeTee & Tie's senior vice president of research and analytics pointed out that private home prices edged up 2.9 per cent in the first six months of this year, less than the 4.2 per cent registered in the first half of 2022 and 4.1 per cent over the same period in 2021. 

She said: "Price growth may have slowed this year as new cooling measures were implemented on September 2022 and April 2023, which raised the ABSD and affected the borrowing ability of buyers.

"Some buyers were also affected by higher borrowing costs as interest rates remain elevated." 

FALL IN NON-LANDED PROPERTY PRICES

The prices of non-landed properties fell by 0.5 per cent in the second quarter, a reversal from the 2.6 per cent increase in the previous quarter.

The decline was mainly driven by properties in the Rest of Central Region (RCR), where prices fell by 2.6 per cent compared with a 4.4 per cent increase in the previous quarter.

The pace of increase in the Core Central Region (CCR) moderated to 0.3 per cent, from the 0.8 per cent increase in the previous quarter.

The increase in prices in the Outside Central Region (OCR) similarly moderated to 1.2 per cent, from a 1.9 per cent increase in the previous quarter.

Prices of landed properties saw their smallest gain in two years, said URA, increasing by 0.1 per cent compared with the 5.9 per cent rise in the previous quarter.

While the sale transaction volume increased by about 16 per cent on a quarter-on-quarter basis amid a rise in the number of units launched for sale, it fell by about 30 per cent on a year-on-year basis, said URA.

The sale transaction volume totalled 4,762 in the second quarter of 2023, compared to 4,121 in the previous quarter and 6,811 in the second quarter of 2022.

Following the cooling measures, the number of purchases by foreigners reduced significantly in June, said Mr Yip.

"Based on caveats, there are 21 purchases by foreigners which translate to 2.9 per cent of total non-landed transactions."

This is a "significant drop" compared to 112 in April 2023 and 69 in May 2023, he noted.

The number of purchases by Permanent Residents increased to 17.1 per cent in June compared to 14.3 per cent in April and 15.6 per cent in May, he added.

"One observation which stands out in June is that all purchases by the Chinese are by Permanent Residents in Singapore," he said.

"Moving forward, the proportion of purchases by foreigners may be between 1 per cent and 2 per cent while that by PRs may increase to as high as 20 per cent."

OUTLOOK

Barring a global economic downturn or unforeseen circumstances, buying activities may continue in the second half of this year as more projects are slated for launch, said Ms Sun.

"Developers may bring forward their project launches before the lunar seventh month which may boost new home sales in the coming months," she added.

With more launches in the pipeline, the market is on track to sell around 8,000 units with prices increasing up to 5 per cent in 2023, noted Mr Yip.

While the resale condo market is seeing slower activities in the second quarter as some buyers stayed out because of the high interest rate, Mr Yip said it should continue to see healthy demand from HDB upgraders and those who want to move in fast.

The higher interest rate may put a cap on transaction volume to an estimated 12,000 units in 2023, he added.

"It may take a few more months before the full effects of the cooling measures can be observed."

The flash estimates are compiled based on transaction prices given in contracts submitted for stamp duty payment and data on units sold by developers up until mid-June.

URA will release its full set of real estate statistics for the second quarter of 2023 on Jul 28.