The last time private home prices fell was at the beginning of the epidemic, when they fell 1.0 percent year-over-year in the first quarter of 2020.

Estimates released by the Urban Redevelopment Authority of Singapore on July 3 show that prices of non-landed private homes in Singapore fell 0.5% quarter-on-quarter, with the rest of the Central Region (RCR), which represents mid-range private homes, being the only area to see a drop, with private home prices falling 2.6%.

A total of four new private residential projects were launched in the second quarter in Other Central, namely Tembusu Grand, Blossoms by the park, The Continuum and The Reserve Residences. Developers are very cautious in pricing, which is one of the reasons for the price changes.

In the private resale market, sellers are also facing cautious pricing from buyers for second homes due to the poor economic climate and tight financing conditions.

Overall, private home prices in the other central districts are adjusting because the price increases in this area have been too high over the past two years, far outpacing the price increases in the rest of the district, said Lan Zhenwen, director of industrial research and consulting at Eugene Tai. Since the end of 2020, the prices of non-landed private homes in other central districts have increased by nearly 30%. In contrast, the Outside Central District (OCR), which represents the mass private housing, and the Core Central District (CCR), which represents high-end private housing, have increased by 22.5% and 10%, respectively.

According to Lan Zhenwen, the roots of the real estate market remain healthy as a relatively stable labor market and continued salary growth support consumer demand for home ownership. But the increase in the additional buyer's stamp duty rate will weaken foreign market demand in the coming months, and economic instability and geopolitics will also affect the potential for households to expand their budgets.

Despite the overall slowdown in price growth, prices of non-landed private homes located outside the core Central and Central districts are still rising slightly.

According to Lan Zhenwen, it is still too early to predict a market top and prices are expected to fluctuate slightly in the next 1-2 quarters, but instability in the economy and labor market, as well as sluggish land bidding to follow, may cause price adjustments. Given the macro-prudential measures implemented by the authorities over the past decade or so, prices are unlikely to adjust significantly.

The Urban Redevelopment Authority estimates that about 3,400 new private residential units are expected to be sold in the first half of this year, and some new private residential projects will also be opened in the third quarter. He expects prices to rise moderately in the second half of this year, when home buyers will have more choices.

Overall, Lan expects private home prices to rise by 3%-5% this year, but there are downside risks. Because of the overall uncertainty, homebuyers should be more cautious when purchasing a home.