Introduction
In Singapore property market, a surprisingly new statistics showed that the new private home sales in Dec 2023 experienced a significant downturn, reaching its lowest point in 15 years.
The year’s overall performance was equally disappointing, marking the weakest year for new home sales since 2008. This article delves into the factors that contributed to this decline and explores insights from experts in the real estate industry.
New Private Home Sales in Dec 2023 Hit 15-Year Low : Slump in Sales
The drop in sales during December was not entirely unexpected. Developers had been cautious throughout the year, refraining from launching new projects due to successive market cooling measures and subdued buying sentiment.
The average take-up rates for new projects with at least 100 units within the first month of their launch also decreased from 64 percent in 2021 and 72 percent in 2022 to 55 percent in 2023.
December’s Sales Figures
Data from the Urban Redevelopment Authority (URA) for December 2023 revealed that developers sold only 135 units, excluding executive condominiums (ECs). This number marked an 83 percent decrease from the 784 units sold in November 2023 and a 21 percent decline from the 170 units sold in the same month the previous year.
The year-end lull, combined with the absence of new project launches, resulted in the lowest monthly sales since January 2009 when only 108 units were transacted.
Annual Sales Performance
For the entirety of 2023, an estimated 6,452 new homes were sold, representing a 9.1 percent decrease compared to the 7,099 sales in 2022 and half the number sold by developers in 2021. This year’s performance also marked the lowest new sales volume recorded in 15 years since 2008, when 4,264 new homes were sold.
Several factors contributed to this sales decline, including property cooling measures implemented in April 2023, a lack of project launches, macroeconomic uncertainties, and interest rate hikes.
Regional Trends
New projects in the Outside Central Region (OCR) and Rest of Central Region (RCR) outperformed those in the Core Central Region (CCR) in December 2023.
PropNex’s data indicated that the two best-selling projects in the RCR city fringe areas were The Continuum, with 17 units sold at a median price of S$2,775 per square foot (psf), and The Landmark, where 13 units changed hands at S$2,853 psf.
In the suburban OCR category, The Myst sold nine units at a median price of S$2,199 psf, and J’den saw seven units sold at a median price of S$2,577 psf.
In contrast, the best-selling CCR projects were Midtown Modern and Watten House, each selling six units at median prices of S$2,882 psf and S$3,258 psf, respectively.
Regional Sales Breakdown
Throughout the year, the RCR dominated overall new private home sales, accounting for 47.1 percent (3,040 units) of total sales, followed by the OCR with 30.3 percent (1,953 units) and the CCR with 22.6 percent (1,459 units). While the RCR experienced an 11.3 percent year-on-year increase in new sales volume for 2023, the OCR and CCR saw declines of 21 percent and 23 percent year-on-year, respectively.
New Private Home Sales in Dec 2023 Hit 15-Year Low : Buyer Preferences
Buyers in 2023 showed a preference for properties priced between S$1 million and S$2.5 million, accounting for approximately 72.4 percent of total transactions. Experts attributed this trend to buyers’ caution regarding elevated interest rates. They will expect that in 2024, homes priced up to S$2.5 million will continue to be the most sought-after.
Foreign Buyer Trends
Foreign demand for private homes remained subdued, with foreigners accounting for only 3 percent of the monthly sales in December, albeit higher than the 1.8 percent in November. From January to May 2023, there were approximately 235 purchases by foreigners, but this number dropped significantly to 80 transactions from June to December 2023.
This decline is due to the higher Additional Buyer’s Stamp Duty (ABSD) on foreign buyers, which doubled from 30 percent to 60 percent in April.
Annual Trends in Foreign Purchases
For the full year, the proportion of new private homes purchased by foreigners, specifically non-permanent residents, decreased from 7.1 percent in 2022 to 5 percent in 2023.
URA’s Realis data indicated that there were two non-landed homes at Watten House that transacted for more than S$10 million, with six more sold for at least S$5 million in December 2023.
Outlook for 2024
As we move into 2024, experts have varying opinions on the market’s trajectory.
Experts believes that demand from HDB upgraders for private housing may weaken due to lower liquidity and smaller budgets.
However, about 20 new projects from awarded government land sales sites will be launched this year, adding approximately 10,000 new units to the market. So the expectations that about 7,000 to 8,000 new private homes to be sold in 2024, an increase from the 6,452 units in 2023 but still below the five-year average.
Sentiment could improve in the second half of 2024 if interest rates ease and the economy recovers. It is anticipated that around 3,300 units across 13 projects may be launched for sale in the first quarter of the year.
New Private Home Sales in Dec 2023 Hit 15-Year Low FAQ Section
Q1: What led to the decline in new home sales in December 2023?
A1: Several factors contributed to the decline in new home sales in December 2023, including cautious developer behavior due to market cooling measures and weak buying sentiment. Additionally, there were no new project launches during the month, and the year-end seasonal lull further impacted sales.
Q2: How did different regions in Singapore perform in terms of new home sales?
A2: In 2023, the Outside Central Region (OCR) and Rest of Central Region (RCR) outperformed the Core Central Region (CCR) in terms of new home sales. The RCR accounted for the highest percentage of total sales, followed by the OCR and CCR. The RCR also experienced a year-on-year increase in new sales volume, while the OCR and CCR saw declines.
Q3: What is the outlook for the Singapore real estate market in 2024?
A3: The outlook for the Singapore real estate market in 2024 varies among experts. Some anticipate increased sales due to the launch of new projects, while others believe that demand may weaken, particularly among HDB upgraders, due to lower liquidity and smaller budgets. Sentiment could improve in the second half of 2024 if interest rates ease and the economy recovers.