Private home price increases of 2.8% Q4; however, rents drop by 2.1% on the back of more housing completions

In total, 18500 units should be completed by 2025. The 21,284 public and private housing units that will be completed by 2023 are part of a larger project to complete close 100,000 units between 2023-2025.

Prices will remain high and stable in H1 2020, despite geopolitical uncertainties. Demand will remain subdued but should still maintain an upward trend.

Analysts therefore anticipate that prices will increase by 3 to 5% in 2024.

Urban Redevelopment Authority’s data, released on January 26, showed that the price of residential properties in the private sector rose 2.8% during the fourth quarter of 2023. The updated price index for Q4 was a bit higher than earlier flash estimates of 2.7 percent by the agency, which were released earlier this month. It followed an increase in the previous quarterly of 0.8 percent.

In the last year, prices increased by 6.8 percent. It is the seventh year in a row that prices are rising, but at a much more measured rate than the 8.6 percent increase in 2020 and the 10.6 percent rise in 2011.

Rents fell 2.1% in Q4 of this year and increased 8.7% over the previous 12 months, which is significantly lower than the 29.7% surge expected in 2022.

Increased interest rates, cooling measures taken over time and slower overall demand may be responsible for the slowdown.

The end of 2023 will see the market balance corrected by a combination of the 21300 units, executive condominiums included (ECs), which were completed last.

2023 will be the year that private homes, excluding ECs (excluding ECs), have been completed at a rate of approximately 19,968. This is a significant increase over 2017, when there were 20,648. This is well above the average of 12600 units per year over the last decade.

8517 completed units were recorded in the third quarter. The fourth quarter saw only 4,085 complete units. The end-of-Q4 vacancy rate dropped to 8.1 percent from 8.4 percent in Q3.

Developers in the primary housing market launched only 1,060 units, excluding ECs. That’s less than half Q3’s 2,805 homes. 7551 units, or more, were offered for sale in the year 2023. This is up from 4,528 homes in 2022.

Rents will also likely be affected by the large number of projects completed and the softening demand for leasing. Even though property taxes will increase in 2024, it’s unlikely that landlords would pass this on to tenants due to a slowing rental industry.
Analysts claim that Singapore’s housing market has finally reached its peak. Prices of private homes have flattened and rents have fallen for the first time since three years.

In the fourth quarter, the overall rental index decreased by 2,1 per cent. This was the first time in three years that the index had fallen.

It’s also the largest decline in rents since Q2 of 2009, when the rents fell 5.2 percent following the global crisis.

As a result of the rapid completion of new homes, homeowners that were temporarily displaced from their home due to construction delays will be able move into the newly completed homes. A greater number of options for tenants gives them the upper-hand in negotiations.

Landed homes led the increase in home prices during the last quarter. The 4.6 percent rise was a reverse of the 3.6% drop in Q3. Prices of landed homes rose by 8 percent for the entire year. That’s a small decrease from gains that reached 9.6 percent in 2020.

Prices of non landed properties rose 2.3% in Q4-2023, against a rise of 2.23% in the preceding quarter. In the entire year of 2023, prices for non-landed properties grew 6.6%, a moderated growth from 8.1% in 2022.

Sales volumes fell 44.9%, to 1,092 from 1,946 units, in Q4, compared with Q3. Sales for 2023 totaled 6,421 units, a decrease of 7,099 from the previous year.

This was a stable quarter for resale sales. 2,831 units were sold in Q4, down 2.4% from Q3’s 2,900. These transactions accounted 65.3 percent of all sales in Q4, up from 55.8 percent in Q3.

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The total number of resale sales in 2023 was 11,329 units, as opposed to the 14,026 sold in 2022.

The rising costs of resale housing and the high interest rates are to blame for the constrained volume of transactions. According to him, the median prices of resale home increased by 2.8% during Q4 and new projects were able to achieve higher prices. In the last year, median prices increased by 8.8%.

Investor demand is also down following the increase of Additional Buyer Stamp Duty. The majority of homes are purchased either to live in or for long-term rent.

11793 private homes, inclusive of ECs, should be completed by the end of this year. By 2025, 6,747 more units will be complete.

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