According to the latest data released by the Urban Redevelopment Authority (URA), the overall private home price index in Singapore grew by 1.1% quarter-on-quarter in Q2 this year, down from 1.4% in Q1. In the first half of the year, private home prices increased by 2.5%, significantly lower than the 3.1% increase last year. This slowdown is primarily influenced by multiple factors, including rising interest rates, uncertain economic prospects, and government cooling measures.
Analysts point out that rising interest rates and economic uncertainty have made homebuyers more cautious. Higher interest rates increase the cost of home purchases, while economic uncertainty makes buyers less confident about future income and asset appreciation. Additionally, a series of cooling measures implemented by the government have also dampened the market. To prevent a real estate bubble, the Singapore government has enacted several policies, such as increasing the Additional Buyer's Stamp Duty (ABSD) and tightening loan limits, directly impacting housing demand.
Aside from these factors, the limited launch of new projects in the first half of the year is another key reason for the slower price growth. With a shortage of new project supply in the market, buyers have limited choices, leading to subdued transaction activity. However, analysts expect a batch of new projects to be launched in the coming months, which will boost market transaction activity, with the annual private home price growth projected to reach 4%.
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Market data shows that in Q2 this year, the median transaction price per square foot of new non-landed private homes fell by 1.5% quarter-on-quarter to $2,238, while the median price per square foot of resale private homes rose by 2.1% to $1,709. This indicates that despite the weak performance in the new private home market, the resale market remains relatively active. With limited new project availability, buyers are turning to the resale market, driving up resale transaction volumes and prices. Data shows that new private home sales dropped by 41.4% quarter-on-quarter, while resale private home transactions increased by 5.8%.
Regarding the performance of different types of private homes, landed property prices rose by 1.8% quarter-on-quarter in Q2, while non-landed private home prices increased by 0.9%. In the sub-markets, prices in the Rest of Central Region (RCR), representing mid-tier private homes, saw the largest increase of 2.2% quarter-on-quarter. In contrast, prices in the Core Central Region (CCR), representing high-end private homes, fell by 0.2% in Q2 after a 3.4% rise in Q1. Prices in the Outside Central Region (OCR), representing mass-market private homes, remained relatively stable with a 0.3% increase in Q2.
The enthusiasm of foreign buyers for purchasing homes rebounded in Q2, with the number of units bought increasing by 63.6% to 72 units. Geopolitical tensions may have prompted more foreigners to buy homes in Singapore, but the 60% Additional Buyer's Stamp Duty (ABSD) effectively curbs a sudden influx of hot money. Despite this, foreign interest in Singapore's real estate market remains strong, showcasing Singapore's appeal as a global investment destination.
Looking ahead, 16 new projects totaling 7,571 units are expected to be launched in the second half of this year. Developers anticipate selling 6,500 new units, with private home prices likely to remain stable and an annual growth rate of up to 4%. With more new project options, buyers are becoming more selective, potentially slowing new project sales. Overall, the annual private home price growth is expected to be between 3% and 4%.
