Condo resale volume down slightly in August as buyers await interest rate cut: SRX, 99.co

SINGAPORE - The condominium resale volume inched down in August – a decrease in sales that analysts attributed to buyers waiting for a potential interest rate cut.

Based on flash estimates from SRX and 99.co released on Sept 24, about 1,080 units were resold, representing a 1.7 per cent drop from the 1,099 units transacted in July.

The resale volume was 16.8 per cent higher year on year, and 5.2 per cent higher than the five-year average volume for the month of August.

“While August resale transaction volume is historically slightly higher than July’s since 2020, this year is the first time that transaction volume is lower,” said Mr Luqman Hakim, chief data and analytics officer at 99.co.

The decline comes amid slight negative sentiment in purchasing private condos at this time and would-be condo buyers are waiting for reduced interest rates before making their move, he added.

Some analysts also pointed out that the transaction volume fell marginally despite the Hungry Ghost Festival – indicating resilient demand within the market.

Ms Christine Sun, chief researcher and strategist at OrangeTee, said the resale volume has shown “a notable increase” compared with the same period in 2023.

“This increase indicates that there is still sustained demand for homes in the secondary market,” she said. “The price differential between new and resale properties remains considerable, and the price gap has led some prospective buyers to buy resale properties.”

By region, more than half (52.2 per cent) of the transactions came from the outside central region (OCR), 29.2 per cent from the rest of central region (RCR), and 18.5 per cent from the core central region (CCR).

Overall prices were relatively stable in August, with a slight decrease of 0.1 index point from July.

Year on year, overall prices rose by 4.6 per cent compared with August 2023. Prices in the RCR posted the biggest increase at 7.2 per cent. Prices in the CCR and OCR were up 1.7 per cent and 4.2 per cent, respectively.

Meanwhile, the percentage of sub-sale transactions to total secondary sale transactions was 7.6 per cent in August, inching up from 7.1 per cent in July.

Sub-sale transactions refer to secondary sale transactions that happened before the project was completed.

In August, the highest transacted price for a resale unit was $12.1 million, for a unit at Nassim Mansion.

The overall median capital gain was $357,000 in August – a decrease of $21,000 from the previous month.

District 10 (Tanglin/Holland/Bukit Timah) posted the highest median capital gain at $720,000, while District 1 (Boat Quay/Raffles Place/Marina) posted the lowest at negative $81,000.

The overall median unlevered return for resale condos was 30.7 per cent in August.

District 16 (Bedok/Upper East Coast) recorded the highest median return at 45.3 per cent, while District 1 (Boat Quay/Raffles Place/Marina) recorded the lowest at negative 4.6 per cent.

Analysts said there will likely be more activity in the resale condo market after interest rate cuts.

Huttons Asia’s chief executive Mark Yip said an interest rate cut might allow buyers to qualify for a bigger loan and smaller monthly mortgage payment.

“This means that buyers previously sitting on the fence due to loan constraints can now buy their new home. Prices of resale condo may rise by 4 per cent to 6 per cent in 2024,” he added.

Ms Wong Shanting, head of research and market intelligence at ERA Singapore, said additional rate cuts by the United States Federal Reserve – now or in the future – could bolster market sentiment down the line.

But OrangeTee’s Ms Sun highlighted that the resale market may face more competition amid upcoming launches. “First-time home buyers may explore public housing as an alternative, particularly if they meet the income ceiling criteria, as many new flats are expected to be unveiled in highly desirable locations during the upcoming October sales launch,” she said.

THE BUSINESS TIMES