More resale condo units change hands in February after four months of decline; prices up 1.4%

SINGAPORE - The condominium resale market picked up pace in February, following the Chinese New Year seasonal lull period the month before, with prices rising 1.4 per cent.

More resale condo units changed hands in February, with an estimated 756 units resold, representing a 50.3 per cent increase from the 503 units the month before, according to flash figures from real estate portals 99.co and SRX released on Tuesday.

This comes after four straight months of decline in transactions, which started in October 2022, following the latest round of cooling measures that were introduced at the end of September to moderate demand in the property market and encourage prudent borrowing.

These measures include a tighter stress test to compute buyers’ eligibility for bank loans and how much they can afford to borrow for the purchase of a property.

Property analysts attributed the pickup in February sales activities to possible pent-up demand after the year-end holiday and Chinese New Year festive lull period. Still, some cautioned that the sales rebound may not be an indication of a market recovery just yet.

OrangeTee & Tie senior vice-president of research and analytics Christine Sun said that although transactions rebounded in February, figures are still below the past 12-month average from January 2021 to February 2022.

Fewer units were also resold in February, compared with the 789 units in the same month a year ago, she added.

“Last month’s sales rebound may not indicate a market recovery after the cooling measures,” said Ms Sun, citing global economic uncertainties such as the woes in the financial sector and elevated mortgage rates and borrowing costs as factors that could dampen market sentiment.

PropNex Realty head of research and content Wong Siew Ying said the transaction figure in February is still relatively subdued, compared with that in previous years.

For instance, a total of 3,730 resale condo units changed hands in the first quarter of 2021, while the figure stood at 2,860 units for the first quarter of 2022, said Ms Wong.

In comparison, an estimated 1,259 units have changed hands in the first two months of 2023 – which suggests that the overall volume is on track to underperform, compared with the previous two years, she said.

“We believe the tightening of lending requirement and the 15-month wait-out period implemented in September, as well as the high interest rates, have collectively weighed on resale market activity in recent months, as buyers become more cautious amid uncertainties,” said Ms Wong. “We anticipate resale condo price growth could be muted as buyers turn more prudent due to the elevated interest rates.”

Mr Pow Ying Khuan, head of research of 99.co, said the increased transactions could also be due to buyers rushing to complete their purchases in mid-February, when the buyer’s stamp duty (BSD) was increased for higher-value properties.

From Feb 15, the portion of the value of residential property in excess of $1.5 million and up to $3 million is taxed at 5 per cent, while that in excess of $3 million is taxed at 6 per cent. This is up from the previous rate of 4 per cent.

In February, condo resale prices increased by 1.4 per cent, reversing the marginal decline posted the month before, flash data showed.

On a year-on-year basis, overall condo resale prices were up 9.2 per cent in February.

Prices of resale condo units in the city fringes rose 1.4 per cent, while those in the suburbs increased by 2.3 per cent. However, prices of units in central Singapore fell marginally by 0.3 per cent.

PropNex’s Ms Wong said that recent new launches, such as Terra Hill in the city fringe, and Sceneca Residence and The Botany @ Dairy Farm in the suburbs, could have influenced resale prices in the two sub-markets.

Huttons Asia chief executive Mark Yip said stronger demand for properties priced at $1.5 million and below, following the revised BSD rates in mid-February, could have propped up prices in the suburbs, where these units are usually located.

The highest transacted price for a resale condo unit in February was $20.5 million at Nassim Park Residences, a freehold development in the Orchard/Holland area.

In the city fringes, the highest transacted price was $8,194,000 for a 99-year leasehold unit at Reflections at Keppel Bay in the HarbourFront area. In the suburbs, a 99-year leasehold unit at Waterfront Isle in the Bedok/Upper East Coast area sold for $3.7 million.