Introduction
The private housing market in Singapore has undergone significant changes in recent quarters, with prices and sales volumes experiencing a notable decline. This shift indicates a transition towards a buyer’s market, where the balance of power has shifted in favor of homebuyers. In this blog post, we will delve into the key factors contributing to this change and explore what it means for the real estate landscape in Singapore.
Decline in Private Home Prices
For the first time since the second quarter of 2023, prices of private homes in Singapore have dipped. The decline of 1.1% between July and September marks a significant shift in the market dynamics. This drop is attributed to weak demand in both the new sales and resale markets, as well as fewer major new launches during the quarter.
Impact on New Sales and Resale Markets
The decline in private home prices is not limited to new sales alone. Resale transactions have also seen a decrease, reflecting a broader slowdown in the market. This trend underscores the current state of the housing market, where buyers are exercising greater caution and negotiating power.
Sales Volume Decline
The overall private residential sales volume has fallen for the third consecutive quarter. In the first quarter of 2024, the sales volume dropped by 2.4% to 4,230 units, compared to the previous quarter. Resale transactions specifically fell by 5% quarter-on-quarter to 2,689 units, while sub-sales declined by 8.3% to 377 units.
New Sales Transactions
Despite the overall decline in sales volume, new sales transactions held up relatively well. They gained 6.6% quarter-on-quarter to 1,164 units, although this is the slowest first-quarter sales since 762 units were transacted in the first quarter of 2008.
Resilience of Underlying Demand
Despite the tempered price growth and lower sales volumes, the underlying demand for private homes remains resilient. This is reflected in healthy household liquidity and the continued interest in new launches, particularly in prime districts. For instance, new launches like Lentor Mansion have been successful, with the project being 77% sold out at a median price of $2,269 per square foot (psf).
Prime District Performance
The prime district non-landed market outperformed other submarkets with a price growth of 3.4% in the first quarter. This was driven by new sale transactions at properties like 19 Nassim, Watten House, and Cuscaden Reserve, as well as two resale deals at The Ritz-Carlton Residences Singapore Cairnhill, which fetched $16.5 million each ($5,397 psf).
Impact on Rental Market
The private home rental market has also been affected by the broader economic conditions. The overall rental index for private homes dipped by 1.9% quarter-on-quarter in the first quarter of 2024, following a 2.1% drop in the previous quarter. This marks the second straight quarter of rental decline from the peak in the third quarter of 2023.
Future Outlook
The rental market is projected to continue moderating due to softer leasing demand, growing rental housing stock, and stiffer competition for tenants. This trend is expected to persist as more units are completed and added to the market. In the first quarter of 2024, 241 units of private homes were completed, and another 8,404 units are expected to be ready by the end of 2024.
Conclusion
The private housing market in Singapore has indeed shifted towards a buyer’s market, characterized by falling prices and declining sales volumes. While this presents opportunities for homebuyers, it also underscores the need for sellers to be more competitive and flexible in their pricing strategies. As the market continues to evolve, it will be crucial to monitor these trends closely to understand their implications for both buyers and sellers in the real estate landscape of Singapore.
Key Takeaways:
- Price Decline: Private home prices have dropped by 1.1% between July and September.
- Sales Volume: Overall private residential sales volume has fallen by 2.4% for the third consecutive quarter.
- New Sales Transactions: New sales transactions have held up relatively well, gaining 6.6% quarter-on-quarter.
- Resilience of Demand: Underlying demand remains resilient, driven by healthy household liquidity and interest in new launches.
- Prime District Performance: The prime district non-landed market has seen a price growth of 3.4% in the first quarter.
- Rental Market: The private home rental market has moderated, with a 1.9% quarter-on-quarter decline in the overall rental index.
By understanding these shifts in the private housing market, both buyers and sellers can navigate the current landscape more effectively and make informed decisions about their real estate investments in Singapore.
