Overall private home prices rose by 8.2% in the first three quarters of the year, up from 5.3% in the first nine months of 2021.
Prices for non-landed properties in the Outside Central Region (OCR) increased to 7.5 percent from 2.1 percent in the second quarter of 2022. This is the fastest price increase in the OCR since the third quarter of 2009.
The significant price increase in the OCR is attributed to the launch of three major projects during the quarter - 372 units of Amo Residence on July 23, 158 units of Sky Eden@Bedok on September 7, and 605 units of Lentor Modern on September 17.
Demand for these new launches in the suburbs is strong and homebuyers are willing to pay $2,000 for a new benchmark sf for a suburban condo, demonstrating the booming wealth and household net worth that has been growing over the past decade.
Elsewhere, non-landed property prices in the Core Central Region (CCR) rose by 2.3% in the third quarter of 2022, up from a 1.9% increase in the previous quarter. In the Rest of Central Region (RCR), prices rose 2.8 percent, down from a 6.4 percent increase in the previous quarter.
Home price increases in the OCR further narrowed the gap between the OCR, CCR and RCR. rising home prices in the OCR in the third quarter of 2022 have narrowed the gap in the average unit price of new non-landed homes for sale between the submarket and the CCR and RCR to 38% and 19%, down from 55% and 28% in the second quarter of 2022.
Buyers may take advantage of the narrowed price gap to consider investing in properties in both CCR and RCR. In addition to the three highest selling OCR releases in the third quarter of 2022, other popular projects that followed were in CCR and RCR, such as Hyll on Holland, Riviere, Leedon Green and Perfect Ten.
Meanwhile, prices for landed properties stabilized at 1.6% YoY in the third quarter of 2022, down from a 2.9% YoY increase in the previous quarter.
In terms of volume, new home sales, excluding executive condominium (EC) units, totaled 2,187 units, down 8.8% from 2,397 transactions in the previous quarter. This was due to a decrease in the number of units launched.
There were 1,455 units for sale launched during the quarter, a 26% decrease from the 1,956 units launched in the second quarter of 2022.
Despite the decrease in the number of new home sales, the absorption rate of new units rose to 150% in the third quarter of 2022 compared to 123% in the previous quarter, indicating that demand for real estate is not dampened or constrained.
Year-to-date developer sales, excluding EC, reached 6,409 units.
Meanwhile, secondary market volume, including resale transactions, declined 10.3% YoY in the third quarter of 2022, totaling 3,961 transactions. The slowdown in the secondary housing market does indicate that homebuyers are more cautious in an increasingly challenging economic environment.
In addition, rental prices rose 8.6% sequentially in 3Q2022, surpassing the previous quarter's 6.7%, which was the largest quarterly increase since the rental index rose 11.4% sequentially in 2Q07.
This is attributed to more foreigners coming to Singapore to work and study as the government eases restrictions on tourist travel and epidemics. As well as a tighter number of units, private residential rents soared 20.8% in the first nine months of the year.
The market is expected to see a further slowdown in sales volume as buyers become more cautious and wary due to new cooling measures and an uncertain economic outlook.
Following the cooling measures and year-end holidays, developers may delay some private home releases until next year. As of Q3 2022, the number of launched and unsold inventory on the market stood at 2,133 units, the lowest level since Q4 2018.
Transaction volumes are expected to drop to between 1,000 and 1,500 units in the fourth quarter of 2022. This would bring the total number of transactions for the year to approximately 8,000 transactions.
Similarly, price growth is expected to slow to between 1% and 2% in the fourth quarter of 2022, resulting in 9% to 10% growth for the year.
At the same time, rents are expected to maintain sustained growth due to the low number of new units being introduced to the market.
The rental market will likely not begin to slow until 2023, and more units are expected to be completed and launched on the market.