Private property price gains in Q2 capped by persistently high interest rates, ample supply
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The drop in new launches has pushed some buyers to the resale market.
PHOTO: ST FILE
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SINGAPORE – Prices of private homes grew at a slower pace in the second quarter, which analysts attributed to subdued sales due to persistently high mortgage rates, an uncertain economic outlook and ample new home supply.
Between April and June, overall private residential property prices grew 1.1 per cent, after a 1.4 per cent climb in the first quarter of 2024 and a 2.8 per cent gain in the fourth quarter of 2023, according to the Urban Redevelopment Authority’s flash estimates released on July 1.
For the first half of 2024, overall prices expanded by 2.5 per cent, compared with a 3.1 per cent gain in the first half of 2023 and a 4.2 per cent jump in the first half of 2022.
A drop in the number of new non-landed launches in the second quarter also had a pronounced effect on overall price growth, as new private homes typically command higher prices compared with resale properties, said OrangeTee Group chief researcher and strategist Christine Sun.
New private home sales, excluding executive condominiums, fell 41.4 per cent to 679 units in the second quarter, from 1,158 in the first quarter. Resale transactions, on the other hand, gained 8.1 per cent to 3,073 units, from 2,844 over the same period, Ms Sun noted.
Many of the fresh launches during the quarter have been smaller boutique developments. The 190-unit Skywaters Residences – the largest launch in the second quarter – is at the top end of the market and unlikely to fit the budget of most buyers, PropNex chief executive Ismail Gafoor said.
As a result, developers’ sales, which hit a 15-year low of 6,421 units in 2023 on weak economic conditions and growing buyers’ fatigue, have continued to be tepid in the first half of 2024, with just 1,843 units transacted.
Ms Tricia Song, CBRE’s head of research for Singapore and South-east Asia, believes first-half 2024 new private home transactions are “on track to hit the lowest half-year sales on record, even lower than the 1,977 units moved in the second half of 2008 during the global financial crisis”.
But resale market volumes have held up so far in 2024, with price-conscious buyers switching to the secondary market as the price gap between new and resale private homes widens, analysts said.
The median transacted prices of new non-landed private homes dropped 1.5 per cent in the second quarter to $2,238 per sq ft (psf) from the first quarter.
In comparison, median transacted resale prices climbed 2.1 per cent over the same period to $1,709 psf, said Mr Nicholas Mak, chief research officer of Singapore property portal Mogul.sg.
Although local demand is expected to stay resilient, overall affordability remains constrained, and buyer resistance is likely to rise on persistently high interest rates and elevated home prices amid ample supply, said Ms Chia Siew Chuin, JLL’s head of residential research for Singapore.
Local interest rates, which are influenced by global rates and tend to broadly follow the direction of other central banks including the US Federal Reserve, have remained higher for longer due to the postponement of US interest rate cuts.
Analysts noted that while overall private residential prices were supported by landed home prices, this segment’s growth has slowed to 1.8 per cent in the second quarter, following a 2.6 per cent gain in the first quarter.
Prices of non-landed properties rose 0.9 per cent in the second quarter, following a 1 per cent growth in the first quarter, as a drop in prime district prices offsets gains in the city fringe areas and suburbs.
Prime district prices fell 0.2 per cent in the second quarter, following a 3.4 per cent jump in the first quarter.
High-end non-landed home prices are starting to flatline on a lack of demand from foreign buyers after the additional buyer’s stamp duty doubled to 60 per cent for this group, and as local buyers also turned selective, said Knight Frank Singapore head of research Leonard Tay.
The relaunches of The Residences at W Singapore Sentosa Cove and Cuscaden Reserve in the first quarter of 2024 at lower average prices of $1,780 psf and $2,900 psf, respectively, also weighed on prime district prices, Ms Song said.
She noted that projects such as freehold condominium Klimt Cairnhill moved more units after offering price discounts.
In the city fringe, prices of new non-landed private homes jumped 2.2 per cent, following a 0.3 per cent gain in the first quarter, while prices in the suburbs edged up 0.3 per cent, compared with a 0.2 per cent rise in the previous quarter.
Preliminary caveat data shows that developers’ sales in the suburbs fell 53 per cent quarter on quarter to 387 units in the second quarter. Suburban prices saw little uplift as buyers turned selective amid more housing options and an absence of price-leading projects entering the market, said Ms Chia.
“This is despite underlying upgrading demand from HDB households and the HDB resale price index rising 2.1 per cent in the second quarter, faster than the 1.8 per cent quarter-on-quarter rise in the previous quarter,” she added.
