Looking ahead to 2023, analysts believe that uncertain macroeconomic conditions may contribute to a further slowdown in private property price growth, which is estimated to be between 3 per cent and 7 per cent this year.

Private property prices grew at the slowest pace in more than two years in the fourth quarter of 2022, up 0.4 per cent from the previous quarter, driven by rising interest rates, the cooling measures introduced at the end of September last year, and a reduction in the supply of new private homes.

On the other hand, the private rental market was strong, with rents jumping 29.7 per cent for the whole of last year, well ahead of the 9.9 per cent increase in 2021.

Analysts said private rents are expected to remain firm due to tight supply and high rental demand from expatriates and HDB upgraders.

According to the Urban Redevelopment Authority's fourth quarter 2022 property data released on Friday (Jan 27), the overall private housing price index for the fourth quarter last year was 188.6, 0.4 per cent higher than the third quarter's 187.8. This was the smallest quarterly increase since the second quarter of 2020, when prices edged up by 0.3 per cent year-on-year.

For all categories of non-landed private housing, prices in the Other Central Region (RCR), representing mid-range private housing, rose the most, up 3.1 per cent in the fourth quarter last year, up from 2.8 per cent in the third quarter.

Prices in the Core Central Region (CCR), representing upmarket private housing, rose by 0.7 per cent, down from 2.3 per cent in the previous quarter.

Prices for private housing outside the Central District (OCR), which represents the mass market, reversed the trend and fell by 2.6 per cent, compared to a 7.5 per cent increase in the previous quarter.

Overall, non-OCR private property prices rose by 0.3 per cent in the fourth quarter of last year, down from 4.4 per cent in the previous quarter, and by 8.1 per cent for the year as a whole, while OCR private property prices rose by 0.6 per cent in the fourth quarter of last year, also down from 1.6 per cent in the previous quarter, and by 9.6 per cent for the year as a whole.

Excluding executive condominiums (EC), developers sold 7,099 units last year, a 45.5 per cent drop in volume and the lowest since the global financial crisis in 2008.

Lower market demand, fewer new projects and the impact of cooling measures led to a slowdown in private home price increases in the fourth quarter of last year.

In addition, the volatility in interest rates made buyers and investors cautious, and the traditionally slow sales season during the festive season further impacted new private home sales.

For the whole of last year, developers launched only 4,528 new units, 56.9 per cent fewer than the 10,496 units launched in 2021.

Unsold inventory at low levels, strong household balance sheets, higher rents and developers passing on higher land and construction costs to buyers will provide support for private home prices this year.

However, based on the weak economic outlook, house prices are likely to rise at a slower rate than in the past two years, by 3 to 5 per cent at most.

Some 34 new projects will come on the market this year, offering some 12,000 units, giving buyers more choice in a number of locations and somewhat alleviating the shortage of supply.

However, the increase in private housing supply comes at a time of economic uncertainty, job cuts in the technology sector, rising interest rates and higher consumer costs.

In light of this, market demand is likely to turn conservative. This year, new private home sales are expected to range from 7,000 to 8,000 units, with overall private home transactions in the range of 21,000 to 25,000 units.

Private rents rose by 7.4% in the fourth quarter, following an 8.6% increase in the third quarter last year.

Including EC, more than 19,000 units are expected to be completed this year, which will help to ease rental pressure. Rent increases are expected to slow down, rising by around 13 to 16 per cent this year.