Private housing market turning into ‘buyer’s market’ as prices, sales volume drop in Q3

SINGAPORE – Prices of private homes fell for the first time since the second quarter of 2023, dipping 1.1 per cent between July to September.

This drop, the biggest since the third quarter of 2016 when prices fell 1.5 per cent, was attributed by analysts to weak demand in both the new sales and resale markets, and fewer major new launches during the quarter.

The latest data, from flash estimates released by the Urban Redevelopment Authority on Oct 1, follows a 0.9 per cent rise in private home prices in the second quarter of 2024 and a 1.4 per cent gain in the first quarter.

For the first nine months of 2024, overall prices saw a mere 1.1 per cent rise, compared with a 3.9 per cent gain over the same period in 2023, and an 8.2 per cent jump in the first three quarters of 2022.

The volume of resale and new sale transactions fell nearly 11 per cent to 4,372 units in the third quarter, while the number of private resale units sold dropped 19.1 per cent quarter on quarter.

“This has turned the private housing market into a buyer’s market,” said Mr Nicholas Mak, chief research officer at Mogul.sg.

“The number of private residential units sold by developers in 2024 is estimated to be the lowest since the 2008 financial crisis. With low sales volume, prices will usually drop.”

Among factors that weighed on overall private residential prices were landed and non-landed property prices, which dropped 3.8 per cent and 0.3 per cent respectively in the third quarter of 2024.

In contrast, landed and non-landed property prices rose 1.9 per cent and 0.6 per cent respectively in the second quarter of the year.

Prime district property prices also weakened, declining 1.5 per cent in the third quarter, compared with a 0.3 per cent drop in the previous quarter.

Suburban home prices dropped, dipping 0.1 per cent, compared with a 0.2 per cent gain in the second quarter. The city fringe area saw a 0.2 per cent gain, compared with a 1.6 per cent rise in the second quarter.

ERA chief executive Marcus Chu said there is weaker demand for suburban and city fringe area homes, which was previously fuelled by Housing Board upgraders. “These buyers have turned back to the HDB market, choosing larger, newer HDB flats over a private condo,” he said.

Analysts said buyers stayed on the sidelines for a number of reasons, which included an increasing resistance to high price points and expectations that interest rates would fall.

The 60 per cent additional buyer’s stamp duty (ABSD) on foreign buyers also pared the proportion of higher-priced private homes sold in the prime district.

Ms Christine Sun, chief researcher and strategist at OrangeTee Group, pointed out that the number of non-landed and landed homes – excluding executive condominiums – that sold for at least $3 million dropped to 768 units in the third quarter. This is down from 887 units in the second quarter.

Private homes that transacted for at least $5 million dropped to 211 units from 273 units over the same period, she said.

Ms Sun said she does not expect a surge in buying following the US Federal Reserve’s September interest rate cut as many banks have already factored the adjustment into their mortgage plans.

But should interest rates continue to drop in the coming months, buying sentiment could improve, she added.

Mr Leonard Tay, Knight Frank Singapore’s head of research, believes the drop in overall private home prices could moderate when the 83 units sold from the 158-unit condominium 8@BT near Beauty World, are factored in the final third-quarter price data to be released on Oct 25.

Flash estimates are compiled based on sales data up until mid-September.

With a reported average sale price of $2,719 psf at 8@BT’s Sept 21 weekend launch, the overall private residential price index could drop less than 1.1 per cent and could even end the third quarter flat, Mr Tay added.