SINGAPORE – Price pressures in the private residential property market have eased, while private rents should continue to fall as a large number of units are slated to be completed and add to supply, the Monetary Authority of Singapore (MAS) said on Nov 27.

Signs of moderation in the property market began to emerge after the latest round of cooling measures announced in April and against a backdrop of elevated interest rates and weakness in economic growth.

Property price growth moderated over two consecutive quarters, from 11.4 per cent year on year in the first quarter of 2023 to 4.4 per cent by the third quarter, the central bank said in a report.

“The easing in price momentum was broad-based, though to different degrees across market segments,” MAS said.

Price growth moderated but remained positive in the city fringes, or rest of the central region, and outside the central region. However, property prices in the core central region fell for the first time on an annual basis since end-2020, registering a 1.3 per cent decrease in the third quarter of 2023.

Meanwhile, transaction activity has slowed and stabilised, and is now back to pre-Covid-19 levels.

Foreign demand, which doubled to 6 per cent in 2022 from 2021 amid the easing of travel restrictions, has declined following the roll-out of new property cooling measures in April.

Demand from foreign buyers has fallen to about 4 per cent of total transaction activity so far in 2023.

MAS said rents continued to rise but at a much slower quarterly pace of 0.8 per cent in the third quarter of 2023, marking the fourth consecutive quarter of easing in rent increases, and the smallest quarterly gain since end-2020.

Supply of completed units has also jumped after the dissipation of pandemic-related disruptions to construction activity.

In the third quarter, the private residential stock increased by about 8,400 units, more than three times the average quarterly increase in 2022.

At the same time, with occupation demand easing slightly, the overall vacancy rate increased to 8.4 per cent, exceeding its long-term average of 6.8 per cent.

“Looking ahead, rental pressures should continue to abate as a large number of units are slated to be completed,” MAS said.

Close to 40,000 private residential units (including executive condos) are expected to be completed from 2023 to 2025, double the 20,000 units completed between 2020 and 2022.