According to estimated data released by the Urban Redevelopment Authority, overall private residential prices increased by 0.8% in the fourth quarter compared to the third quarter, marking the seventh consecutive year of an upward trend. However, the growth rate was lower than the 8.6% recorded in 2022.
Several new private residential projects were launched in the fourth quarter, contributing to a 2.2% increase in overall non-landed private home prices, equivalent to the growth observed in the third quarter. For the entire year, this price index increased by 6.5%, lower than the 8.1% growth in the previous year.
Among different types of private homes, the Outside Central Region (OCR), representing mass-market private homes, experienced the fastest growth in prices during the fourth quarter, with a quarter-on-quarter increase of 4.6%. Prices of Core Central Region (CCR) homes, representing high-end private homes, rose by 4.2%, while prices of Rest of Central Region (RCR) homes, representing mid-tier private homes, decreased by 1.2%.
Looking at the entire year, prices of high-end and mid-tier non-landed private homes increased by 2.1% and 2.7%, respectively, lower than the 4.8% and 9.7% growth in the previous year. However, mass-market private home prices accelerated by 13.8% last year, surpassing the 9.3% growth in the prior year.
Desmond Lee, Senior Director of Data Analytics at Huttons Group, stated that the accelerated rise in overall private home prices in the fourth quarter was mainly driven by the launch of three new private residential projects in November: Hillock Green, J'den, and Watten House.
He pointed out, "This indicates that there are many local buyers in the market, while foreign buyers have gradually exited due to the additional buyer's stamp duty raised to 60%. In the fourth quarter of last year, Singapore citizens and permanent residents accounted for 98.5% of the total transaction volume, while foreign buyers accounted for only 1.5%."
Although the full-year price increase for private homes last year was lower than the previous year, Sun Yanqing, Vice President of OrangeTee & Tie's Research and Consultancy Department, believes that the significant slowdown in prices indicates that the upward trend triggered by the pandemic-induced inflation has ended, and the market is moving towards stability.
It is worth noting that landed residential prices fell by 3.6% in the third quarter but rebounded in the fourth quarter with a quarter-on-quarter growth of 4.5%.
Chris Wee, Head of Research at Colliers International, expects that the landed residential market will receive support from local buyers this year, but limited supply may affect transaction volumes.
Regarding private home transaction volume, the overall transaction volume decreased by 27% quarter-on-quarter in the fourth quarter, with reports showing a total of 3,800 units sold. The annual transaction volume decreased by 15%, reaching only 18,510 units. This is a new low since 2016.
To meet market demand and keep prices at levels consistent with the economic environment, the government's land supply plan has increased the number of private residential units. The list of sites for last year increased by about 50%, reaching 9,250 units. Supply for the first half of this year will further increase to 5,450 units, exceeding the 5,160 units in the second half of last year and the 4,090 units in the first half of last year.
The Housing and Development Board stated that it is expected that these additional private residential units will be put up for sale starting this year to meet market demand and help maintain prices within a reasonable range.
The board also noted that global economic activity is expected to slow further this year, and local mortgage rates may remain at relatively high levels. Homebuying households should exercise caution in their loan commitments, especially in long-term mortgages.
Ismail Gafoor, CEO of PropNex Realty, believes that developers will price new projects based on market conditions to drive sales. Local owner-occupiers will be the main buyers.
He predicts that private home prices will rise by 3% to 4% for the whole year, with transaction volumes ranging from 13,000 units to 14,000 units. Desmond Lee and Chris Wee also share the same prediction, expecting private home prices to rise by 3% to 5% for the whole year.