Following the introduction of the new round of measures, there is a general wait and see in the market, will this affect the sales and prices of private homes? Even though the cooling measures were introduced at the end of April, the market was watching to see how the figures for the whole month of April would actually turn out.

On 15 May, the latest estimated figures released by the Urban Redevelopment Authority of Singapore (URA) gave the answer: new private home sales in Singapore in April this year were up a whopping 80.3% from March, with 887 units sold, the highest level in the seven months since September 2022.

This was further analysed by Yvonne Blue, Director of Industrial Research and Consultancy at DYC.

New private residential sales in April increased by 35.8 per cent compared to the same month last year, thanks to the impressive performance of two new developments in the Other Central Region (RCR), Tembusu Grand and Blossoms by the Park. These two projects sold a total of 559 new private residential units, accounting for 63% of the total sales volume, thus driving new private residential sales in the entire other Central District (RCR), which accounted for 71% of the total sales volume in April, making it the best performing district in April. In contrast, the Core Central Region (CCR), which represents upscale private homes, and the Outside Central Region (OCR), which represents mass market private homes, accounted for 23% and 6% respectively.

Developers launched a total of 779 new private residential units in April this year, a 36% increase year-on-year and significantly higher than the 573 new private residential units launched in March.

In the Core Central District (CCR), sales of new private residential units fell by 11% in March, yet by April, the number of new units sold still exceeded the number of new launches in the CCR, despite the low number of new property launches in the district. It is worth noting that for five consecutive months, the number of new units sold in the Central core area far exceeded the number of new launches. According to Lam Chun Man's analysis, this is due to the fact that homebuyers generally perceive a higher value for their homes in the Central core, and given the smaller price gap between the Central core and other Central districts, some homebuyers are turning to properties located in the Central core.

Of the top 10 best-selling projects island-wide, five are located in the Central Core Region (CCR), another four in the Other Central Region (RCR), and one outside the Central Region (OCR).

Blue noted that sales and prices in Singapore's resale private housing market had stabilised in April amidst an uncertain economic outlook and tight financing conditions, while pricing in the new private housing market would continue to set new benchmarks. According to Lan Chen Wen, the median price of resale private residential units remained largely unchanged at S$1,593 per square foot in April 2023, while the median price of the new private residential market rose by 9.6 per cent to S$2,492 per square foot from S$2,273 per square foot.

Nonetheless, Lan Zhenwen believes that subscription rates for new projects are easily influenced by opening prices, and taking into account multiple factors such as current market demand and funding, he believes that mass market private housing projects that are attractively priced are more likely to be sought after in the opening phase.

What is the demand from expatriate buyers?

The proportion of foreign buyers purchasing private homes in Singapore fell from 6.0% in March to 5.4% in April. Lan Zhenwen predicts that the proportion of foreign buyers buying will stabilise in 2023. Although the Additional Buyer's Stamp Duty (ABSD) for foreign buyers has been increased to 60% from the original 30%, due to the previous Free Trade Agreement between the US and Singapore, US citizens are entitled to the same tax rate as Singapore citizens when purchasing property in Singapore, for example, US citizens are exempt from paying ABSD when purchasing their first property as Singapore citizens are, so Lan expects that US citizens There will still be continued demand for home ownership.

However, as foreign buyers' demand for homes slows down, the overall demand for homes may shrink this year, and he expects property developers to delay the opening of new developments until the second half of the year as a result, especially for projects in prime locations.

Foreign buyers accounted for the highest proportion of new private home sales in the core Central District, at 18 per cent. This is also the segment of demand that has been most significantly hit by the current cooling measures. For new private developments in the fringe and suburban areas, such as Tembusu Grand, Blossoms by the Park and The Continuum, 98% of the buyers were Singapore citizens and permanent residents.

With only a 3-5 percentage point increase in the Additional Buyer's Stamp Duty rate for Singapore citizens and permanent residents under the cooling measures, Lan expects demand for new private residential projects on the fringes of the city and suburbs to remain strong in the coming months.

In general, demand is likely to slow down in 2023 due to increased economic uncertainty and higher mortgage costs, and given the weak performance of the resale HDB market and the recent announcement of cooling measures that will also affect demand for homes, Blue said he expects new private home sales of around 7,000-8,000 units in 2023, supported by a relatively healthy job market.

As buyers' affordability is somewhat affected by the headwinds of the economic environment and tight financing conditions, Mr Lam predicts that private home prices are expected to rise by 4-6% for 2023 as a whole, down from the 8.6% increase in 2022.