Private home prices rose 2.8% but rents fell 2.1% as more housing was completed and demand weakened

Investor demand has also declined following the hike of Additional Buyer’s stamp duty, with most homes purchased for long-term rental or personal use.

11793 private homes (including ECs) are expected be completed in 2019. The next 6,747 homes will be available in 2025.

Between 2024 and 2025, approximately 18,500 housing units are expected to be finished. Close to 100,000 housing units, both public and privately owned, will be built between 2023 and 25.

Amid geopolitical unrest and high interest rates, prices will likely remain high in H1 of 2024. While demand is subdued, it should remain on an upward trajectory.
The prices rose 6.8% in the past year. Although this is the 7th straight year that prices have risen, the pace is more moderate than in the years 2022 and 2021 when the price increase was 8.6%.

Rents, on the other hand, dropped by 2.1% during Q4 and grew at 8.7% in the whole year. This was a significant drop compared to the 29.7% growth in 2022.

Multiple cooling measures, elevated interest rates and slower demand are all factors that have contributed to the slowdown in price increases.

By 2023 the imbalance created by a strong demand overtaking a market that is undersupplied will have been corrected. The 21300 private units completed in 2018, including executive condos (ECs), are a good example.

2023 saw the completion of 19,968 private houses, excluding ECs. This is the most since 2017, which had 20,648 homes. This is significantly higher than the 10-year average of 12,600 housing units.

Only 4,085 completions were made in Q4 compared to 8,517 completions in Q3. The Q4 vacancy rates dropped from 8.4% to just 8.1%.

Analysts say that the housing market in Singapore may have finally peaked, as private home prices have flattened out, and rents are falling for the very first time in 3 years, in the 4th quarter of 2023.

Urban Redevelopment Authority data released on Friday (Jan. 26) revealed that private residential property prices rose by 2.8 percent in Q4 2023. The updated Q4 prices index was just a little higher than the 2.7% flash estimate released by the agency in early January, and it followed a 0.8% increase the previous quarter.

In Q4, the rental index dropped by 2.1%, the first drop in three years.

Rents are down by 5.2 per cent, the biggest quarterly drop since Q2 2009 when they dropped following the global economic crisis of the previous quarter.

The surge in home completions allows homeowners who have been temporarily displaced because of construction delays to exit the rental market and move directly into their newly constructed homes. In addition, tenants have more options in terms of lease negotiation, thanks to the increase in the number of available leasing options.

The last quarter saw a rise of 4.6% in prices for landed homes, which is a turnaround from the 3.6% decline seen in Q3. The landed home price rose by 8 per cent for the year. This is a slight slowdown from the 9.6 per cent increase in 2022.

Prices for non-landed properties increased by 2.3% in Q4 of 2023, as opposed to the 2.2% increase in the prior quarter. Prices of non-landed homes grew by 6.6% in total last year. That’s down from an 8.1% increase in 2022.

In Q4, developers sold 1,060 homes in the primary market (excluding ECs), less than half as many units as were launched for sale in Q3. Yet, 7551 units have been launched for sale by 2023 compared to 4,528 units from 2022.

Total resale units in 2023 were 11,329, down from 14,026 transactions in 2022.

The high interest rate and rising prices of resale properties are the main reasons for the low transaction volume. In Q4, the median prices for resale properties rose 2.8%, with new projects achieving higher prices. Median prices for the entire year increased by 8.8%.

Analysts predict that prices will grow between 3 and 5 percent by 2024.

The high number of completed projects and softening leasing demand will likely push down rents. Even though the property tax burden will be higher in 2024 than it is today, landlords in a slowing market are unlikely to pass this increase on to tenants.

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The Q4 sales volume dropped by 43,9% from 1,946 to 1,092 new units. The total number of units sold in 2023 is 6,421 compared to 7,099 the year before.

The resale market, however, was more stable in Q4, with 2,831 sales, a decrease of 2.4 per cent compared to Q3, when 2,900 sold. In Q4, these deals represented 65.3% of total sales, a significant increase from 55.8% in the previous quarter.

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