Private housing prices fall 0.4% q-o-q in 2Q2023; first decline in three years
/ EdgeProp Singapore |
Private housing prices edged downwards by 0.4% q-o-q in 2Q2023, reversing from the 3.3% q-o-q growth recorded for 1Q2023 (Picture: Samuel Isaac Chua/The Edge Singapore)
SINGAPORE (EDGEPROP) - After 12 consecutive quarters of growth, private housing prices edged downwards by 0.4% q-o-q in 2Q2023, according to flash estimates released by URA on July 3, reversing from the 3.3% q-o-q growth recorded for 1Q2023. This is the first decline recorded in three years since 1Q2020, when prices dipped by 1% q-o-q.
“It appears that the latest round of cooling measures announced on April 26, combined with rising interest rates that limited affordability, may have reined in price growth as home buyers purchasing for investment become price-resistant and adopt a wait-and-see attitude from the sidelines before deciding on their next move,” says Leonard Tay, head of research at Knight Frank Singapore.
The price decline in 2Q2023 was underpinned by slower price momentum across all market segments. Prices of non-landed properties fell 0.5% q-o-q, while prices of landed properties grew just 0.1% q-o-q, its smallest gain in two years.
Source: URA
For the non-landed private housing segment, prices were primarily weighed down by the Rest of Central Region (RCR), where prices fell 2.6% q-o-q in 2Q2023, reversing from the 4.4% growth recorded in 1Q2023. In the Core Central Region (CCR), prices rose 0.3% q-o-q, slowing from 0.8% growth in 1Q2023, while prices in the Outside Central Region (OCR) grew 1.2%, slowing from the 1.9% growth recorded in 1Q2023.
Lam Chern Woon, head of research and consulting at Edmund Tie, says that competitive pricing for the four major RCR project launches in 2Q2023 — Tembusu Grand, Blossoms by the Park, The Continuum and The Reserve Residences — contributed to the quarterly price decline in the region. “In the secondary market, home sellers have also faced resistance from buyers on prices, as market sentiment softened while financing limits remained tight,” he adds.
Wong Xian Yang, head of research for Singapore and Southeast Asia at Cushman & Wakefield, says that based on caveat data as of July 3, RCR new sales median prices fell 5.8% q-o-q to $2,498 psf, from $2,652 psf in 1Q2023. He also points out that most new project launches were 99-year leasehold developments, which may have driven the RCR prices lower. In 1Q2023, new home sales in the RCR were driven by the freehold Terra Hill, which saw units transacted at a median price of $2,692 psf.
Considering the flash estimates for 2Q2023, private housing prices have risen 2.9% in 1H2023 and 27.5% since bottoming in 1Q2020, says Tricia Song, head of research for Southeast Asia at CBRE.
Song believes the impact of the cooling measures will “continue to reverberate”. She points out that foreign buying has cooled significantly, with foreigners accounting for 4% of total condo sales in 2Q2023, down from 7% in 1Q2023 and 4Q2022, respectively. Meanwhile, local buying sentiment remains tentative in light of downbeat macroeconomic conditions and elevated interest rates, though demand remains strong for “realistically-priced projects” with attractive locational attributes, she adds.
In any case, Song says home prices have peaked and will likely stabilise in the next few quarters. “Barring widespread retrenchments and a sustained recession, a significant price correction is not expected given low unsold inventory and generally healthy household balance sheets,” she continues. CBRE is maintaining its private home price growth forecast of 3% for 2023, easing from the 8.6% growth chalked up in 2022.
Edmund Tie’s Lam, however, notes that despite softer price growth momentum across segments, non-landed home prices in the CCR and OCR continue to eke out increases. “It is too early to call the peak of the market cycle, and we expect property prices to trade sideways for the next one to two quarters,” he says.
Lam expects any price increases for the rest of this year to moderate amid several upcoming launches. He predicts property prices could rise 3% to 5% this year due to new private home sales of around 7,000 to 8,000 units.
Check out the latest listings near Tembusu Grand, Blossoms by the Park, The Continuum, The Reserve Residences, Terra Hill
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