-- Singapore’s private housing prices continued to rise in Q4 2023, capping the year with a 6.7% full year increase, albeit slowing slightly from the 8.6% increase in 2022. This means private home prices have grown for 7 straight years, after bottoming in mid-2017. 2023’s increase was led by suburban non-landed market which rose 13.8% y-o-y, while the prime and city fringe markets grew by a much more sustainable pace of 2.1% and 2.7% respectively. Nonetheless, sale transaction volume had fallen by about 27% on a q-o-q basis in Q4 2023 and by about 15% on a y-o-y basis for the whole of 2023 -- this was the lowest annual sale transaction volume since 2016. Prices have moved ahead of economic growth of 1.2% (preliminary) in 2023, despite higher interest rates and the punitive 60% ABSD for foreigners (since late April), mainly driven by locals’ pent-up demand and the slower supply over 2020-2022. Going forward, we expect the high prices to continue to deter demand, and with higher supply coming through, prices should slow down further in 2024, albeit unlikely to correct significantly due to resilient household balance sheets and low unsold inventory.
Flash estimates show that private home prices rose moderately by 2.7% q-o-q in Q4 2023, accelerating from the 0.8% q-o-q increase in Q3 2023. With this, private home prices for 2023 as a whole have risen 6.7%, slowing down from the 8.6% in 2022, and are up 32.3% since bottoming in Q1 2020. Prices of non-landed properties increased by 6.5% in 2023, moderating from the 8.1% increase in 2022. Prices of non-landed properties in the CCR and RCR increased by 2.1% and 2.7% respectively in 2023, moderating from their respective increases of 4.8% and 9.7% in 2022 while OCR prices saw stronger price growth of 13.8% in 2023 compared to 9.3% in 2022.
Prices of landed properties rebounded strongly by 4.5% q-o-q after a 3.6% decline in Q3 2023 while prices in the non-landed segment grew 2.2% q-o-q, at a similar pace to the last quarter. The increase in prices of non-landed properties was driven by properties in the Outside of Central Region (OCR) and CCR where prices rose by 4.6% q-o-q and 4.2% q-o-q respectively in Q4 2023, supported by benchmark prices set at new launches. Overall growth in non-landed properties, however, was weighed down by a 1.2% q-o-q decline in RCR prices.
• During the quarter, the launch of J’den in the OCR and the private launch of Watten House in the CCR saw warm responses and set new benchmark prices in their respective areas, supporting price growth in their segments.
• The decline in the RCR price index could be attributed to existing projects such as Liv @ MB, Myra and One Pearl Bank clearing their last few units at discounts. The mentioned three projects sold their last few units in Q4 2023 and are now fully sold.
Outlook
Based on caveats downloaded from realis on 2 Jan 2024 (today), 1,048 new private homes (excluding ECs) were sold in Q4 2023, 46.1% lower than the 1,946 units moved in Q3 2023 amid the December holiday lull and despite robust performance at new launch J’den. Overall sell-through rate in 2023 has been lower than 2022. 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.
Preliminary numbers show that 6,377 new homes were sold in 2023, 10.2% lower than the 7,099 units recorded in 2022, which was a 14-year low since 2008’s 4,264 units. This is largely due to softer economic conditions, elevated mortgage rates and new cooling measures. Attractive developer pricing, easing interest rates and an economic recovery in 2024 remain key to bringing buyer confidence back to the market.
CBRE Research is cautiously optimistic on the private residential market in 2024. The current tentative buying sentiment could stretch into H1 2024 amid still-high interest rates and uncertain economic conditions. However, we do not expect a significant correction with still-low unemployment rate, resilient household balance sheets, and possibly an economic recovery in H2 2024 -- MTI forecasts 1 – 3% GDP growth for 2024, vs the preliminary estimate of 1.2% for 2023. Correspondingly, we expect 7,000-8,000 new homes could be sold in 2024, an improvement from about 6,500 units for the whole of 2023 but still below the 5-year average new developer sales across 2018 – 2022 of 9,763 units. We expect private residential prices to rise 3 – 4% in 2024, to be led by attractive suburban launches in 2024.
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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.
