In recent times, the Singapore real estate market has shown a series of changes and trends. According to analysis by Jun Rong, Chief Research Officer at Tycoon Real Estate website, over the past three years, the price increases of mid-range and mass-market private residences have exceeded those of luxury private residences, but the situation has been different in the last six months.
He pointed out that the expectation of interest rate cuts this year has led to more buyers choosing to adopt a wait-and-see approach, which has to some extent suppressed the price increase of local private residences, leading to a slowdown in quarter-on-quarter increases to 1.5%, lower than the fourth quarter of last year. Data from the Urban Redevelopment Authority shows that in addition to the slowdown in price increases, the overall transaction volume of private residences in the first quarter decreased by 20% compared to the previous quarter, continuing the downward trend from last year, resulting in the lowest total transaction volume of private residences since 2016.
This downward trend is particularly pronounced in the resale market, where some buyers anticipate this year's interest rate cuts and choose to temporarily wait, resulting in a nearly 30% decrease in transaction volume of resale private residences in the first quarter. High interest rates and economic uncertainties have made buyers more cautious, and although more new private residential projects are being launched, buyers still need more time to make decisions, hoping to purchase at more favorable prices after interest rate cuts in the second half of the year. Although the price increases of luxury private residences remain high, they are slightly lower than last year, while the price increases of mid-range and mass-market private residences have slowed down.
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Zheng Weiming pointed out that adjustments to the Additional Buyer's Stamp Duty for foreign buyers have resulted in fewer foreign buyers for luxury private residences, but local residents and permanent residents still show strong interest in high-end private residential projects in the central core area, especially those near popular schools and with good investment opportunities. Looking ahead, analysts believe that driven by the expectation of interest rate cuts and the launch of more new private residential projects, the prices of local private residences will steadily rise, but the overall rate of increase may be lower than last year.
Although demand for new private residences may remain resilient, it is expected that the overall market transaction volume growth will be limited. Although developers may stimulate sales with attractive pricing, the high land and development costs make it difficult to significantly adjust the selling prices of new private residences. Therefore, the overall price increase of private residences this year may be between 3% and 5%, lower than last year's level. Considering the impact of real estate cooling measures and geopolitical tensions, it is expected that the growth in transaction volume of private residences this year will be limited, at approximately 18,000 to 20,000 units, roughly the same as last year.
These changes and trends demonstrate the complexity and dynamism of the Singapore real estate market. Although the market faces some challenges, analysts remain optimistic about the future, expecting the real estate market to maintain steady growth under the combined influence of policies and market factors.
