-- In the absence of new launches and the holiday season, monthly new private home sales sank to a 15-year low in December 2023.
New home sales slumped 82.8% m-o-m to 135 units in Dec 2023 from 784 units in Nov 2023 and 20.6% y-o-y from 170 units in Dec 2022 on the December seasonal lull as developers held back on launches amid the year-end festivities. This was also a low since Dec 2008 when 131 units were sold and takes the tally of new home sales for 2023 to 6,452 units, 9.1% lower than the 7,099 units sold in 2022. Sentiment this year has clearly deteriorated with higher interest rates, softer economic prospects and two more rounds of cooling measures since.
Top 10 Selling Projects in Dec 2023 (including ECs and landed)
Source: CBRE Research, URA
With no new launch in Dec 2023, most sales were from previously-launched projects.
The top performing project in the month was freehold development, The Continuum launched in May 2023 which sold another 17 units at a median price of $2,775 psf. Following close behind was The Landmark which sold 13 units at a median price of $2,853 psf. The third best-selling project was The Myst which was launched in Jul 2023 and sold another 9 units in Dec 2023 to bring cumulative sales to 45%.
New Home Sales (excl. ECs) by quantum
Source: CBRE Research, URA
*Based on Realis new sales (excl. EC) caveats extracted on 15 Jan 2024.
By market segment, Dec 2023’s developer sales (excluding ECs) were led by the Rest of Central Region (RCR) where 66 units (48.9%) were sold, followed by the Outside Central Region (OCR) where 45 (33.3%) units were sold and the Core Central Region (CCR) which saw the sale of 24 units (17.8%). This compares to 19.3% in the CCR, 12.0% in the RCR and 68.8% in the OCR in Nov 2023.
Based on quantum size, the largest proportion of new private homes sold (excl. ECs) were in the S$2.00 mil - S$2.50 mil range at 29.1%. This was followed by the S$3.00 mil – S$5.00 mil bracket at 21.6%.
Outlook and forecasts
2023 new home sales stand at 6,452 units, 9.1% below the 7,099 units in 2022, which was already a 14-year low since 2008’s 4,264 units. This could be attributed to weaker economic conditions and an indication of increased buyer selectiveness amid a myriad of new launch options, buyer fatigue and increasing resistance to high price points. In addition, prices have already moved up significantly and investors could feel that there is limited room for upside. Some of the projects which are targeted at investors or typically have a higher proportion of foreigner buyers will continue to face some resistance given the recent cooling measures doubling foreigners’ ABSD to 60% as well as a further increase in ABSD rate for investors. These investors will reassess their options and take a longer time to shop around.
While the current tentative buying sentiment is expected to stretch into H1 2024 amid still-high interest rates and uncertain economic conditions, Jan 2024 could see a significant rebound in sales from a pickup in launches for the new year. These include OCR launches, Hillhaven (341 units) and The Hillshore (59 units) set in launch over the 20 Jan and 27 Jan weekends respectively and freehold RCR project, The Arcady at Boon Keng (172 units) launching on 20 Jan. The EC segment is also expecting the launch of Lumina Grand (512 units) located at Bukit Batok West Avenue 5.
Overall, CBRE Research is cautiously optimistic on the private residential market in 2024. We expect forecast 7,000 – 8,000 new homes could be sold in 2024, an improvement from the 6,452 units in 2023 but still below the 5-year average new developer sales across 2018 – 2022 of 9,763 units. In the near term, downbeat macroeconomic conditions, cooling measures and elevated interest rates are likely to continue weighing on the private residential market but sentiment could improve in H2 2024 if interest rates ease and the economy recovers.
Correspondingly, private residential prices could rise 3 – 4% in 2024, slowing from 2023’s 6.7% (based on flash estimates). A significant correction is not expected given still-low unemployment rate, resilient household balance sheets, and low unsold inventory.
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CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2022 revenue). The company has approximately 115,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
