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Private home prices up 2.7% in Q4, taking full-year rise to 6.7%

The fourth quarter of 2023 saw an increase of 2.7% rise in the price of private homes in Singapore, mainly due to sales of new launches that were priced at benchmark prices, and lower numbers of transactions.

The price index climbed by 6.7% in the fourth quarter. This is lower than 8.6% in 2022and 10.6% in 2021.

Tan Tee Khoon is the PropertyGuru Singapore Country Manager. He mentioned the price fluctuations between 2023 and 2024 indicate that the value of homes for private use has attained a high point.

Tricia Song is CBRE’s head of research in Singapore, as well asSouth-east Asia. She said that prices for private homes have increased for seven consecutive years since the lowest was reached in the middle of 2017. Prices have also increased by 32.3% from the lowest point in Q1 2020, she noted. According to her, prices are up 32.3% since the lows of Q1 in 2020.

The majority of the price increase in 2023 was driven by the non-landed market in suburban areas|, in which prices increased 13.8% in the course of the year, according to Song. The Outside Central Region’s (OCR) price hikes far outstripped those of the Rest of Central Region’s (RCR), where prices increased by 2.7%, and the most expensive Core Central Region prices (CCR), are more expensive by 2.1%.

Prices for private condos in OCR increased by 4.6% quarter-on-quarter (qoq) after an increase of 5.5% rise in the third quarterPrices in the CCR increased by a fraction less, of 4.2% during the fourth quarter but recovered from the prior quarter’s drop of 2.7%. 

The fourth quarter featured two launches which were launched at benchmark prices and both had astonishly impressive sales. CapitaLand’s J’Den,situated in Jurong East, sold 323 units at an average price of S$2,451 per square foot (psf) when it launched. UOL and SingLand’s Watten House located in Bukit Timah sold 102 units with an average {of S$3,230 per square foot.

Wong Xian Yang, Cushman & wakefield’s head of research, claimed that both projects accounted for about half of the new sales in each segment (OCR and CCR) in the fourth quarter.

In the RCR, prices dropped 1.2%  in the fourth quarter following a 2.1% rise during the preceding quarter. Certain projects might have sold their remaining unsold units at a reduced price, which is a factor in the drop in the RCR index, according to Song. The projects include Liv @ MB in Mountbatten, Myra in Potong Pasiras well as, One Pearl Bank condo in Outram, which are now completely sold.

Analysts said that the lower sales numbers for Q4 and the entire year, slower price increases outside the OCR resulted in a greater resistance of buyers against high prices.

Cushman & and Wakefield’s Wong said that the current prices for non-landed are at their historic highs in Q4 2023. This will remain the case until for the next quarter, which is the end of Q4 2023. “Compared to pre-pandemic levels| (at the end of Q4 2019), CCR, RCR and OCR non-landed prices are cumulatively rising by 11%, 37%, and 40%, according to the respective figures,” he said.

Even though household balance sheets are in good shape, “homebuyers have been and will remain cautious when it comes to their home buying decisions”, according to Knight Frank’s {head of research Leonard Tay. 

However, Lee Sze Teck, Huttons {senior director of data analytics observed that the strong sales during the Q4 launches were proof of the “ample capacity of local buyers”, in a time when foreign buyers had stayed away due to the increase in Additional Buyer’s Stamp Duty (ABSD) in April 2023.

In the fourth quarter of 2004, permanent residents and Singaporeans comprised 98.5% of the homeowners who bought private homes, and foreigners made up of 1.5%.

According to caveats data at January 2nd, 2024the number of purchases by foreigners in Q4 2023 dipped from 271 in Q1 2023, compared to 62 for Q4 2023. This is also the lowest since the introduction of ABSD in December 2011, according to Lee.

The volume of transactions decrease throughout the course of the yearBased on estimates from flash releases published by the Urban Redevelopment Authority (URA) on Tuesday (Jan 2), the total sale transactions of private residential homes sold upto mid-December was 27% less than Q3’s volume, which was dropping to 3,800 units in Q4}.

The total for the year came to 18,510 units. This is down 15% from 21,890 units that were sold in 2022. This is also the lowest annual volume of sales since 2016, according to URA. This figure includes the new sales, resales, and subsales, and it does not include executive condo units.

The final quarter of 2023 witnessed a booming performance for landed homes. Home prices for landed properties increased 4.5% in Q4, which reversed a 3.6% drop in the preceding quarter. For the entire 2023, the prices of homes that were landed were higher by 7.8% compared to 9.6% in 2022.

Knight Frank’s Tay said that the demand for freehold landed properties remains “evergreen” and “the most significant obstacle to successful deals will be limited stock of inventory available for sale”.

The 4.5%  price increase could be caused by a slight increase} in the number of detached house sales, which  amounted to 43 units in the fourth quarter, up from 39 in the prior quarter, said Ismail Gafoor, chief executive officer of PropNex Realty. The median price for detached homes also climbed|detached houses also increased by 16% qoq to S$1,714 per square foot on the land. This could have slowed down weaker prices in the semi-detached and terrace house segments, he explained.

Landed homeowners are also likely to raise prices and have little motivation to sell, according to CEO of ERA Marcus Chu. A number of landed deals have failed as buyers and sellers were not in agreement over the price, he added. 

Analysts in the market are predicting prices slowing down further, and be in the range of 3% to 5% over the next year.

CBRE’s Song said that the present price hikes will continue to hiner demand. “With increasing supply the prices are expected to slow even more in 2024,” she said. However, home prices are “unlikely to see significant correction due to the resilience of household balance sheets and the low amount of unsold inventory”.

Pricing for the new launch is expected to stay “elevated” because of the land already committed and construction expenses, according to Tay.

PropNex’s Gafoor is of the opinion that developers should set prices “more sensibly” to boost sales at the weekend of their launch.

As Tay mentioned, investors looking at capital preservation, appreciation, and ongoing income from locals and foreigners will likely remain on the sidelines “until the interest rates reach their peak, or stabilize and possibly decrease and until there is more certainty in the outlook for economic growth

“Nonetheless, the past has demonstrated that investors who are experienced and familiar with Singapore’s private residential market are quick to respond when periods of low activity shift with the resumption of transactional activity,” he said.

Source: https://www.businesstimes.com.sg/property/private-home-prices-27-q4-taking-full-year-rise-67

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