PRESS RELEASES

03 July 2023, SINGAPORE – Signs point towards a more sustainable growth in the residential property market in Q2 2023, following the strong price increase in the past two years, as three rounds of cooling measures since December 2021 and the high interest rates exert a downward pressure on prices. Private home prices moderated across all segments, while HDB resale prices continued to grow at a measured pace, flash estimates showed.

Q2 2023 URA Private Residential Property Index (Flash)
Flash estimates from the Urban Redevelopment Authority (URA) indicated that overall private home prices declined by 0.4% QOQ in Q2 2023, reversing the 3.3% QOQ increase in the previous quarter (see Table 1). It snapped a three-year streak of price growth - being the first quarterly contraction in the URA PPI since Q1 2020, where prices fell by 1% QOQ. As per the flash estimates, private home prices have climbed by a cumulative 2.9% in the first half of 2023. The final print for the Q2 2023 URA PPI will be released on 28 July 2023.

The price growth in Q2 2023 was led by the landed private homes segment, which posted a marginal 0.1% QOQ rise, significantly slower than the 5.9% QOQ increase in the previous quarter. This could be due to the thinner sales volume of landed homes in Q2 2023. Caveat data showed that sales of new and resale landed homes fell by about 16% to 295 units from Q1 to Q2 2023, with the more expensive detached house segment seeing a sharper QOQ decline in volume.

Over in the non-landed segment, prices slipped by 0.5%, following the 2.6% QOQ growth in Q1 2023. This marks the first quarterly decline in non-landed home prices in over a year, since the 0.3% QOQ dip in prices recorded in Q1 2022. In the first half of 2023, non-landed private home prices have grown by 2.1%, slower than the 3.3% cumulative increase in 1H 2022. The decline in non-landed home prices in Q2 2023 was led by the Rest of Central Region (RCR).

Non-landed home prices in the RCR declined by 2.6% QOQ in Q2 – reversing the 4.4% QOQ growth in Q1 2023. The decline comes after four consecutive quarters of healthy price gains in the RCR, and in spite of a number of new launches in this sub-market – reflecting that developers are pricing projects more sensitively. In Q2 2023, there were four major new launches in the city fringe – Tembusu Grand, Blossoms by the Park, The Continuum (freehold), and The Reserve Residences – which helped to spur sales volume.

Tembusu Grand, which was launched in April prior to the 27th April’s tightening of the additional buyer’s stamp duty (ABSD) rates, sold more than 56% of its 638 units in Q2 at a median price of $2,462 psf. The other three launches came after the cooling measures, with Blossoms by the Park hitting the market days after the ABSD rate hike; Blossoms by the Park shifted about 78% of its 275 units at a median price of $2,433 psf. Meanwhile, The Continuum and The Reserve Residences were launched in May, with the former selling about 28% of its 816 units at a median price of $2,721 psf, reflecting a slight premium for its freehold tenure. Integrated development The Reserve Residences was met with strong demand, moving more than 81% of its 732 units at a median price of $2,474 psf since its launch, based on URA Realis caveat data.

In the Core Central Region (CCR), non-landed home prices rose by 0.3% QOQ – representing the smallest quarterly price increase for this sub-market since it posted a 0.1% decline in Q1 2022. There were no major new launches in the CCR in Q2 2023, as developers continued to pare down on their unsold inventory, with prices generally still holding steady amidst expectations that the hike in ABSD rates could weigh on CCR home sales. The Atelier was the top-selling project in the primary market, shifting 71 units in Q2 2023.

Meanwhile, non-landed private home prices in the Outside Central Region (OCR) ticked up by 1.2% QOQ in Q2 2023, easing from the 1.9% QOQ increase in the previous quarter. The lack of new project launches in the OCR during the quarter, as well as limited unsold stock of new homes contributed to lower transaction volume in this sub-market, which had weighed on price growth. In view of a dearth of launches, the best-selling OCR project in Q2 2023 was The Botany at Dairy Farm, which sold 30 units.

URA said 4,762 private homes (up till mid-June) have been sold in Q2 2023 – compared to the 4,121 units transacted in Q1 2023. However, this is still substantially lower than the 6,811 units sold in Q2 2022.

Please attribute the comments below to Ismail Gafoor, CEO of PropNex Realty.
“The moderation in overall private home prices in Q2 2023 to -0.4% from 3.3% in Q1 should be met with some relief in the market, following much discussion on rising home prices in the media. Given the muted economic growth – and some economists have flagged possible technical recession risk – a slower increase in home prices is also beneficial for the market, ensuring that prices do not get too far ahead of economic fundamentals. Also, this could possibly help to stay the hands of the authorities in introducing more cooling measures in the near-term, seeing that prices are moderating.

We think the tightening of the ABSD measure from 27th April 2023, following two rounds of cooling measures earlier (Dec 2021 and Sep 2022), and the elevated interest rates are working through the market. Investment demand from foreigners has dipped as observed in caveat data, and the high interest rates appear to be putting a drag on the resale private homes segment. Based on caveats lodged, the proportion of non-landed new private home sales (ex. EC) by foreigners (non-PR) was at 5.3% in Q2, sharply lower than the 11.6% in Q1 2023 and 16.6% in Q4 2022. Meanwhile, the portion of new private homes purchased by Singaporean buyers climbed to 84.4% in Q2 2023 (see Table 2).

Buyers remain largely price sensitive, particularly after the cooling measures and as mortgage rates stayed high. They may also be more cautious in the light of slower economic outlook. Developers are mindful of these factors and are pricing units in tune with market sentiments. Looking into Q3 2023, we anticipate the market to be livelier with several new launches lined up, including in the RCR and OCR which should be relatively well-received by buyers, especially in the OCR where the unsold stock is very low. Therefore, we are expecting new home sales to pick up in Q3, but prices could hold steady.

For the whole of 2023, we project that overall private home prices could rise by 4% to 5% and developers’ sales may range from 7,000 to 7,500 units (ex. EC). Meanwhile, private resale volume could come in at 12,000 to 13,000 units – down from 14,026 units in 2022 – as the high interest rates and tight resale stock continue to weigh on sales.”

Q2 2023 HDB Resale Price Index (Flash)
The flash estimates released by the Housing and Development Board (HDB) showed that resale prices of public housing flats climbed by 1.4% QOQ in Q1 2023, slightly higher than the 1.0% QOQ increase in the previous quarter (see Table 3). This marks the 13th straight QOQ growth in the HDB Resale Price Index.

The HDB added that about 6,409 resale flats changed hands in Q2 2023 (data up to 29 June 2023). In Q1 2023, 6,979 HDB flats were resold. The transaction volume recorded in Q2 2023 is the lowest quarterly sales tally since Q2 2020 (3,426 resale flats), where sales were affected by the COVID-19 restrictions.

Please attribute the comments below to Wong Siew Ying, Head of Research and Content, PropNex Realty.
“Looking at the flash estimates, HDB resale flat prices continued to grow at a measured pace in Q2 2023 at 1.4% QOQ, after the 1% QOQ increase in the previous quarter. It is the second consecutive quarter where the HDB resale price index grew at below the 2% mark, following nine previous quarters where prices rose by more than 2% to 3% per quarter. This may possibly indicate that the slower price increase in Q1 2023 is not a blip and that HDB resale prices are embarking on a more sustainable growth path, after two years of strong price growth. Resale flat prices rose by 12.7% in 2021 and 10.4% in 2022, fuelled partly by healthy demand from buyers who sought larger homes and those who were concerned about completion delays in the construction of new flats amidst the Covid-19 pandemic then.

We think the ramping up of BTO (build-to-order) new flat supply, the price resistance on the part of prospective buyers, and the implementation of cooling measures in September 2022 – including stricter HDB home loan requirements, and a 15-month wait out period for private home owners who wish to purchase an HDB resale flat after they have sold their private home - have led to a moderation in the HDB resale market. Meanwhile, some flat owners may also be more willing to negotiate on prices as they are looking to sell their flat expeditiously after receiving keys to their new home. HDB flat upgraders may obtain a refund on the ABSD paid on their new home, if they sell their flat within 6 months of getting keys to their new residential property.

Based on transaction data, non-mature estates accounted for about 62% of the HDB resale volume in Q2 2023, while mature estates made up 38% of Q2’s sales. There were 105 HDB flats there were resold for at least $1 million in Q2 2023 – representing about 1.67% of the quarter’s resale transactions. Including the 103 units of “million-dollar resale flats” sold in Q1 2023, there were 208 such deals done in the first half of 2023, up from 166 units in the corresponding period in 2022.

In the first half of the year, we estimate that more than 13,380 HDB resale flats have been sold. For the full-year 2023, we maintain our projection for the resale flat volume to trend at around 27,000 to 28,000 units, with demand for smaller flats likely to remain strong. We anticipate that HDB resale prices could grow by 5% to 6% in 2023, slowly substantially from the double-digit growth booked in the past two years.”