The Lunar New Year holiday and property cooling measures led to the first decline in non-landed private resale prices in over two years, with resale prices falling by 0.6 per cent in January, while transaction volumes fell for the fourth consecutive month, slipping by 22.6 per cent year-on-year.

Analysts believe that the decline is only temporary, as prices are expected to remain stable for the rest of the year due to limited supply of new private homes and unabated demand.

Estimates released on Monday (Feb 27) by property website 99.co and SRX, Singapore's joint real estate trading network, showed that overall resale prices of non-landed private homes fell in January for the first time since July 2020.

Resale prices for private homes in the Out of Central Region (OCR), which represents mass market private homes, and in the Other Central Region (RCR), which represents mid-range private homes, fell by 1.2 per cent and 0.2 per cent respectively in January. Resale prices in the Core Central Region (CCR), which represents the upper end of the private sector, rose by 2.5 per cent year-on-year.

Compared to the same month last year, overall non-landed private resale prices rose by 8.6 per cent, while upscale, midscale and mass market resale prices increased by 6.4 per cent, 7.8 per cent and 9.7 per cent respectively.

OrangeTee & Tie director of research and consultancy Sun Yanqing said the drop in prices was mainly due to fewer viewings during the Lunar New Year period and a corresponding drop in transactions.

In January, 519 units changed hands, 22.6 per cent less than in December last year. If compared to January last year, this represents a decrease of 43.2 per cent. The largest number of units changed hands outside the Central District, with popular private homes accounting for 48.7 per cent of total transactions, while mid-range and high-end private homes accounted for 30.6 per cent and 20.7 per cent respectively.

According to Sun Yanqing, the property cooling measures introduced in September last year seem to have worked, as homeowners have to wait 15 months after selling their private homes before they can buy resale HDB flats, and high interest rates have discouraged some homeowners who were planning to sell their homes.

"House prices remain high, especially for new private homes, resulting in the high cost of buying a replacement home. In addition, some homeowners may be keeping their homes for rent because rental income remains good."

ERA's Head of Industry Research and Consultancy, John Mak, shared the same view. He noted that demand for mass market private housing may have been affected by the cooling measures, with transactions falling 37 per cent year-on-year as a result, the largest drop in the private housing category.

He also said, "Some homeowners planning to move from private to HDB flats are holding off selling their homes because of the new regulations, reducing the supply of resale private homes coming onto the market for sale."

With the economic outlook still uncertain and interest rates expected to rise gradually, Bona SpA's head of research and content, Wong Sau Ying, predicted that buyers would remain cautious. They will also take into account the recent increase in the buyer's stamp duty rate and the impact on transaction prices when buying more expensive private homes.

She said, "Overall resale private home prices are expected to be relatively stable, with the limited supply helping to support prices."

Sun Yanqing expects more new private residential projects to be completed in the next few months, when homeowners who are reluctant to reduce their prices may face price pressure.

Mr Mak is more optimistic, saying that with the reopening of China's borders, more Chinese buyers are likely to come to the country to buy homes and if prices dip, it will instead be a time for buyers to enter the market.

He expects 30 new private residential projects to be launched this year, twice as many as last year, and the prices of these new private homes are expected to be higher than the resale prices of older projects nearby, potentially driving up prices in the overall property market.

Private resale prices in Central District rebound from November last year, with the price index increasing by 0.6% in January

Resale prices for non-landed private homes in the Central District have not increased as much as those in the non-Central District over the past five years, but resale prices for private homes in the Central District have started to pick up since November last year, with the resale price index increasing by 0.6 per cent in January.

The National University Institute of Real Estate and Urban Studies (IREUS) released its January estimate of the Non-Landed Private Property Price Index (NUS SRPI) on Tuesday (28 February), showing that overall non-landed private property resale prices were unchanged from December last year; this was mainly due to a 0.3% contraction in the price index for non-Central District private properties (excluding small units) and a 0.5% contraction in the price index for small private properties, while the price index for Central District private properties rose by 0.6%. The price index for private homes in the Central District rose by 0.6%.

In an interview with the Lianhe Zaobao, ERA's Head of Industrial Research and Consultancy, Mr Mak Chun-wing, said that resale prices in the Central District had been slower than in other areas for about five years, but had started to pick up in the past few months, while resale prices in the non-Central District had declined, indicating that the private residential market in the Central District was beginning to recover.

The overall property price index edged up by 0.7% in December, as revised by the National University Institute of Real Estate and Urban Studies (NUIRE), compared to a slight increase of 0.5% estimated.

The Central District property price index, which excludes small flats, was revised to 0.3 per cent from 0.1 per cent, while the increase for small flats was revised upwards to 1.4 per cent from an estimate of 0.9 per cent. The non-Central Region property price index was revised upwards from 0.7 per cent to 0.9 per cent.

Mr Mak said, "Buyers are finding that the difference between Central and non-Central private home prices has narrowed and Central properties are becoming worth investing in."

He also believes that the increase in buyer's stamp duty (BSD) will not dampen demand for high-end private homes. Buyers with genuine demand will not be deterred from their purchase plans by the small increase.

He expects price appreciation for non-landed private properties in the Central District to accelerate in the first half of this year, with a full-year growth rate of 5 to 8 per cent.