Rent drop by another 1.9% in Q1. Private home prices up 1.4%

Singapore’s prices for private housing rose at the lowest quarterly rate it has seen in almost three-years, as sales of homes slowed down, supply expanded and rents dropped further in first quarter of 2024.

Analysts predict that pressure will continue to be exerted on the private housing market in the next few months as the economic uncertainty continues to dampen both the demand for home purchases and rentals.

Urban Redevelopment Authority data released on April 26 showed that residential property prices in the private sector rose 1.4% during the first four months of 2024. The agency had estimated a 1.5 percent increase earlier this month. However, the price of private residential properties rose by 1.4 per cent during the first quarter of 2024.

The increase of 1.4 percent is the slowest since Q3 20,21, when there was a 1.1 percent rise.

Rents decreased by 1.9 % in Q1, which is a continuation of the 2.1 % decline that occurred in the preceding quarter.

The slower rate of price increases reflects the cautious approach taken by homebuyers in light of slower wage gains and weaker economic conditions.

The price of private houses has risen 34.4% since the Covid epidemic began.

As interest rates rise and ABSD (additional stamp duty) is implemented for foreigners in April 2023 at 60 percent, it appears that there will be more resistance to higher prices. Developers’ sales in 2023 reached 6,421 unit, a record low for 15 years.

Unsold inventories of uncompleted (excluding ECs), increased by 17.8 per cent to 19,936 from 16,929 units at Q4 2023. In Q1, the unsold inventory of completed units (including completed units) rose by 17 per cent, to 20,204.

Home prices rose the most in the first three months of 2024. This was due to the increase in land values, up 2.6% compared with the previous quarter’s 4.6%.

Prices for non-landed properties increased 1 per cent during Q1, compared to a rise of 2.3 per cent the previous quarter.

Prime Core Central Region Prices (CCR), up by 3.4 percent, drove Q1 price increases. Rest of Central Region, and Outside Central Region, saw gains of only 0.2 and 0.3 percent, respectively.

The public launch by Watten House at the CCR seemed to have increased sentiment within the segment. Projects such as Perfect Ten, and Leedon Green were seeing higher median sales prices.

CCR buyers could move prices up to catch other regions. CCR price growth between 2021-2023 was only about 11%, a significant difference from other regions which saw prices increase by over 30%.

The overall volume of sales fell 2.4% in the first quarter for the third time. This was due to a drop from 4,230 units. Re-sale sales fell by 5% to 2,689 and sub-sales were down 8.3% to 377.

The only improvement was in the new market, where volume grew 6.6% to 1164 units during Q1. In Q1, developers offered more private residences for sale than in Q4, with 1,304 units (excluding executive condominiums).

In Q1, however, new launches were not as well received. Take-up rates for new launches of more than 100 items were around 39 percent, compared with 54 percent one year ago.

The first quarter of 2008 saw 762 units being sold, which was the lowest ever level for the first three months of the year.

Lentor Mansion

Developers could also be pricing units more reasonably to attract local buyers. In Q1, new non-landed residential homes (excluding ECs), were transacted at a median price of S$1.96m, down from S$2.15m in the preceding quarter.

Rents, on the other hand, fell by 1.9 per cent during Q1, adding to the decline of 2.1% in the previous quarter.

The number of completed private homes in 2017 was the highest since 2016, with 20,803 units.

In the first four months of 2018, only 241 housing units were finished, mostly in the freehold Meyer Mansion with 200 apartments located in district 15. The number of net completed units actually dropped by 188, most likely because projects sold to redevelopment were demolished.

The vacancy ratio fell from 8.1 to 6.8 at the end of the first quarter, down from 8.1 in Q4.

On the basis of expected completion dates for 2024, 10561 private houses, including ECs are scheduled to be completed by the third quarter. The completion of another 6,316 housing units is expected in 2025.

Analysts expect that rents in the future will further decline.

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Rents can fall up to five percent this year because of the housing shortage, fewer expats arriving and budget constraints for the tenant pool.

Rents might stabilize by next year because new completions between 2025-2026 will average 6,691 per annum, a much smaller number than the decade long average of 13,275.

Rents still remain 52 per cent higher than their Q3 2020 trough. She expects CCR to further fall with higher vacancy rates and more substantial completions by 2024 .

However, a healthy number of new launches is likely to stimulate demand and market activity.

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