Figures are based off the official flash estimates for URA quarterly statistics, released on 1 Oct 2024.
Weaker Buyer Sentiment Lingers
Buyer sentiment has weakened, leading to a decrease in transaction volumes and a small decline in private home price growth. Amidst a slowdown in overall transactions during 3Q 2024, the All-Residential Property Price Index (PPI) saw a slight decline. This correction can largely be attributed to a decrease in new launches, which have historically energized price growth.
The private property market continues to experience pressures from various headwinds. Local layoffs in the banking and technology sectors have impacted buyer confidence. Furthermore, prior to the Federal Reserve’s rate cut in September, potential buyers were cautious due to high interest rates affecting their affordability.
This combination of job security fears and stricter borrowing terms has led to some prospective buyers adopting a more cautious stance, resulting in lower transaction volumes in the private residential market for 3Q 2024.
Revised Economic Indicators
According to the Monetary Authority of Singapore, private sector economists have adjusted their GDP growth forecast for 2024 from 2.4% to 2.6%. Coupled with the Fed’s latest rate cut and other positive indicators, there is hope for renewed sentiment among homebuyers. However, the increasing trend of retrenchments, now more prominent since Q4 2022, raises concerns as it leads to longer durations before work is found.
Price Trends in the Residential Market
In the non-landed private home segment, prices decreased by 0.3% q-o-q during 3Q 2024, a reversal from the 0.6% gain observed in the prior quarter. Only the Rest of Central Region (RCR) showed a slight price increase of 0.2% q-o-q in 3Q 2024, while the Outside Central Region (OCR) and Core Central Region (CCR) experienced declines of 0.1% and 1.5% q-o-q, respectively.
Transaction Volume Overview
Transaction numbers for all private properties declined in 3Q 2024. As per flash estimates, 4,372 units were sold, reflecting an 11.0% q-o-q drop from 4,915 units sold in 2Q 2024, and a year-on-year decline of 15.9% from 5,201 units in 3Q 2023.
New Sale Transactions
Three project launches occurred in 3Q 2024, with projects like Kassia and Sora launched in July, and 8@BT in September. The customary reluctance to launch new projects during the Hungry Ghost Festival contributed to fewer launches this quarter.
Caveat data from URA Realis as of 30 September shows that developers sold 1,033 new non-landed private homes (excluding ECs) in 3Q 2024, indicating a 42.5% increase from the 725 units transacted in 2Q 2024. The total number of new non-landed private homes sold in 3Q 2024 stands at approximately 2,922 units.
In 3Q 2024, 71.7% of new home transactions were priced below 2.5million,with26.32.5million,with26.31.5 million, largely driven by smaller units. Buyers with HDB addresses constituted only 15.4% of all new condo buyers, a decline from 27.1% in 2Q 2024, primarily attributing the widening price gap to decreasing affordability.
Resale and Sub-Sale Transactions
Sales of non-landed private homes continue to be driven by resale transactions, accounting for 68% in 3Q 2024, although this shows a q-o-q drop of 18.9% in sales from the secondary market. Despite this decline, demand in the secondary market remains robust due to a significant price gap between new launches and resale properties.
Caveat data indicates a substantial drop in sub-sales, falling by 39.2% q-o-q, suggesting that recent project completions have led to a supply realignment.
Regional Market Dynamics
Amongst the regions, the CCR faced the steepest declines, falling 1.5% q-o-q for non-landed private properties (excluding ECs). The OCR also experienced a downturn, with prices shrinking by 0.1% q-o-q, despite a year-on-year increase.
In the upcoming months, new home transaction volumes are expected to rise due to anticipated launches that could contribute approximately 5,200 units in 4Q 2024.
Looking Ahead
In light of improving economic sentiment and recent interest rate cuts, buyer confidence may rebound. However, market activity is expected to continue being selective, with the CCR likely seeing less activity compared to the RCR and OCR regions, where demand will be buoyed by upcoming launches.
Market Forecast for Non-Landed Private Residential Properties
New Sale
Price: Increase between 3% to 5%
Volume: 5,500 to 6,500 units
Resale/Sub-sale
Price: Increase between 3% to 5%
Volume: 5,500 to 6,500 units
ERA projects total resale transactions to reach between 12,000 and 13,000 units, with prices rising 3% to 5% y-o-y in 2024. For new sales, projections indicate between 5,500 to 6,500 units by year-end, revised from prior estimates.
Disclaimer:
This information is extracted from the ERA Research blog and is provided in good faith. It does not absolve parties of their responsibility to verify the information with relevant sources and to seek appropriate advice from qualified professionals, including valuers, financial advisors, bankers, and lawyers. For clarity, ERA Realty Network and its sales representatives disclaim any responsibility for the accuracy, reliability, or completeness of the information provided.
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