According to the latest estimates released by the Urban Redevelopment Authority of Singapore (URA), sales of new private homes, excluding executive condominiums (ECs), rose for the third consecutive month, up 13.6 per cent in March from a year earlier, with a total of 492 units sold.
According to Yvonne Lam, Director of Industrial Research and Consultancy at Tai Yuk Cheung, the main reason for the hot sales in March was the opening of The Botany at Dairy Farm, a property development outside the Central District (OCR), which sold 184 units, driving sales for the month as a whole, with sales at The Botany (pictured below) accounting for 37% of sales in March as a whole.
The number of new private homes opened in March totalled 573 units, a 43% jump from the number of units opened in February this year (401 units). In comparison by district, the Outside Central District (OCR), which represents mass-market private housing, was the most popular among buyers, accounting for nearly half (47%) of total sales in March, followed by the Core Central District (CCR), which represents upscale private housing, accounting for 40% of total sales in March, and the Other Central District (RCR), which represents mid-range private housing, accounting for 13% of total sales in March.
According to Lam Chun Man, sales in the core Central and outside the Central District fell due to a lack of new launches in March, however, he highlighted that the core Central District sold 197 units in March despite only 41 new launches, a market take-up rate of 481%. He believes that buyers are increasingly concerned about the value of properties in the Central District, leading more buyers to purchase homes in the area.
Of the top 10 best-selling projects in the Lion City in March, eight were in the core Central District, which represents upmarket private housing, another was in the other Central District, which represents mid-market private housing, and the remaining project, Man King Hin, was outside the Central District.
New home prices were significantly stronger in March, with seven of the top 10 projects in March selling at a higher median price than the four projects in February. Prices for these seven projects rose by an average of 2.6% year-on-year in March, while prices for the other two projects fell by an average of 2% year-on-year. According to Mr Lam Chun Man, Director of Industrial Research and Consultancy at DYC, as the inventory of unsold property units decreases, developers are brave enough to raise prices in response to continued market demand.
Mr Lam also mentioned that the increase in Buyer's Stamp Duty announced in the 2023 Budget has somewhat moderated the increase in property prices. It was announced that the buyer's stamp duty rate for homes over S$1.5 million would be increased from 4 per cent to 5 per cent for the S$1.5 million to S$3 million segment, and from 4 per cent to 6 per cent for the above S$3 million segment. The figures show that the share of new private residential units priced at S$1.5 million and above fell from 95 per cent in February to 72 per cent in March.
Lan expects that developers may shift to more 1 and 2 bedroom units in new projects, thereby limiting the price of units and thereby adjusting for the psychological impact of higher purchase costs on buyers. He also noted that the median price of resale private homes fell by 3% in March, after two consecutive months of increases this year.
For expatriate buyers, the number of new and resale private homes purchased in December last year was 72 units, compared to 94 units in March this year. Despite the overall upward trend, the share of foreign buyers actually fluctuated slightly over the months. For example, in March this year, the share of foreigners buying non-landed private homes (new and resale private homes) reached only 6 per cent of total sales for the month, marking the second consecutive month of decline in the share of foreign buyers.
Mr Lan believes that although China has eased a number of restrictions on new crowns, it may take some time before the demand for Singapore properties from foreign buyers is further evident. He also believes that the location of new property launches will also affect the ratio of growth in expatriate demand to local demand, with projects launched in recent months on the fringes of the city and in the suburbs likely to attract more local buyers.
With a number of property projects opening for the remainder of the year, Lan maintains his forecast for new private residential sales this year in the range of 8,000 to 9,000 units. However, he believes that with the momentum in the resale HDB market slowing down and financing and borrowing costs remaining constrained, the risk is skewed to the downside. As more projects are completed this year and next, Mr Lam believes that the rental market will face pressure, which will subsequently affect the sales market as well.
With high land and construction costs, Lan believes that developers are still in a good position to price new launches. Overall private property prices are expected to continue to rise by 5 to 7 per cent in 2023, following an 8.6 per cent increase in 2022, amidst growing economic headwinds.
