The continued rise in private residential prices reflects strong demand for housing despite economic headwinds such as rising interest rates and slowing economic growth, as well as rising buyer's stamp duty (for higher value properties).
The acceleration in price growth reflects the resilience of the market following the cooling measures announced in September 2022. the resumption of momentum in private residential price growth in the first quarter of 2023 suggests that the latest round of cooling measures has not sounded the alarm for the residential property market.
Prices for both landed and non-landed properties rose in the last quarter, recording year-on-year growth rates of 5.7% and 2.5% respectively.
The rise in landed residential prices was mainly driven by sales of the 132-unit Pollen Collection, a Bukit Sembawang development in Serita Hills.
Since its launch in October 2022, the project has doubled its take-up to eight units. The median price of its row houses rose from $1,893 per square foot in the fourth quarter of 2022 to $2,199 per square foot in the first quarter of 2023.
Supported by strong demand, the rate of growth in home prices on available land accelerated from the 0.6% YoY increase recorded in the fourth quarter of 2022. Buyers remain resolute in their desire to secure this scarce form of housing in Singapore's high-rise buildings, at the cost of paying a higher asking price.
Prices for non-landed homes also increased at a faster pace compared to the previous quarter, when they rose by 0.3% q-o-q. Price growth in Q1 2023 was led by the Rest of Central Region (RCR), where prices rose by 4% q-o-q, compared to a 3.1% increase in the previous quarter. This increase was driven by new projects launched last quarter, including the 270-unit Terra Hill at Yew Siang Road, which set a new price benchmark of $2,650 per sq ft for the community with its launch weekend in February.
Prices in the Outer Central Region (OCR) rose 1.9 per cent, reversing a 2.6 per cent decline in the fourth quarter of 2022. Price increases were supported by the launch of Sceneca Residence in Dannamera and Botany at Dairy Farm in Dairy Farm Walk, which reached $2,072 and $2,070 per square foot respectively.
In the Core Central Region (CCR), non-landed residential prices rose by 1% year-on-year, compared to a 0.7% increase in the previous quarter. As the price gap between the CCR and the OCR/RCR narrowed, there was an increase in the number of project starts underway in the CCR.
In terms of total sales, 1,178 new homes were sold in the first quarter of 2023, based on data submitted as at 3 April. This is a 70.7% increase on the 690 units sold in the fourth quarter of 2022, although these figures are still "significantly below" the historical average.
More foreigners returned to the local residential property market in the first quarter of 2023. The most popular projects for foreigners in the first quarter of 2023 were Riviere (21 units), Klimt Cairnhill (20 units), Perfect Ten (10 units), Leedon Green (7 units) ), Pullman Residences Newton (7 units) and The Botany at Dairy Farm (5 units).
Looking ahead, the more cautious sentiment observed among market buyers is likely to prevail in the coming months due to high interest rates, tighter financing conditions and the economic slowdown. Nevertheless, the forecast of 7,500 to 8,500 new private residential sales for 2023 remains unchanged for the time being, given that upcoming projects such as Tembusu Grand, The Continuum and Lentor Hill Residences are likely to drive demand.
Private residential prices are expected to remain positive this year, albeit at a slower rate of around 3 to 5 per cent compared to last year's 8.6 per cent increase. Prices will be supported by several factors, including a stable job market. Continued escalating demand for HDB flats due to higher HDB resale prices, the reopening of China and low levels of unsold stock.
