Growth moderates as Q2 private home price index rises 1.1% q-o-q

Sustained high interest rates, an uncertain economic outlook, and property cooling measures have prompted homebuyers to exercise greater caution. While Singapore's overall private residential property price index continued to climb, the pace of growth has moderated.

Analysts generally believe that apart from economic headwinds and interest rate considerations, fewer new project launches in the first half of the year also contributed to the slower price growth. With more new projects slated for release in the coming months, market activity is expected to pick up, and full-year price growth could reach 4%.

According to flash estimates released by the Urban Redevelopment Authority (URA) for the second quarter of this year, overall private home prices rose by 1.1% quarter-on-quarter, easing from the 1.4% increase recorded in Q1.

On a half-yearly basis, private home prices increased by 2.5% in the first half of this year, slower than the 3.1% growth seen in the same period last year.

Buyer sentiment began cooling last year, which pushed new private home sales to a 15-year low. This subdued sentiment spilled over into the first half of this year, with only 1,843 units sold—poised to set a historic low for new private home sales.

This volume is even lower than the 1,977 units transacted in the second half of 2008 during the Global Financial Crisis.

In the first five months of this year, among new projects with more than 100 units, only one out of six (17%) sold more than half of its units during its launch month. This marks a stark contrast to the same period last year, when four out of seven newly launched projects (57%) achieved this milestone.

However, amid softening demand for new private homes, the resale market has demonstrated relative resilience.

Faced with limited new launches, buyers turned to the secondary market, which supported both resale transaction volumes and prices.

In the second quarter of this year, the median transacted price per square foot (psf) for new non-landed private homes dipped 1.5% quarter-on-quarter to $2,238 psf, whereas resale non-landed private homes saw their median price rise by 2.1% to $1,709 psf. In terms of transaction volumes, new home sales tumbled 41.4% quarter-on-quarter, while resale transactions rose by 5.8%.

Analysts: ABSD Remains Effective in Curbing Sudden Influx of Hot Money

URA data shows that landed home prices climbed 1.8% quarter-on-quarter in Q2, while non-landed private home prices rose by 0.9%. Across submarkets, the Rest of Central Region (RCR), representing mid-tier private homes, recorded the strongest quarter-on-quarter price growth at 2.2%. In contrast, prices in the prime Core Central Region (CCR) reversed course from a 3.4% rise in Q1 to a 0.2% decline in Q2. Meanwhile, prices in the Outside Central Region (OCR), representing mass-market homes, remained relatively steady, inching up 0.3% following a 0.2% gain in Q1.

Foreign buyer transactions rose 63.6% in the second quarter to around 72 units. While heightened geopolitical tensions may have spurred more foreigners to acquire property in Singapore, the 60% Additional Buyer's Stamp Duty (ABSD) continues to effectively deter sudden influxes of speculative hot money into the market.

The second half of the year could see up to 16 new project launches yield a total of 7,571 units. Developers are projected to sell around 6,500 new units, with overall private home prices expected to stay stable and log a full-year increase of up to 4%.

Given the wider selection of new projects, buyers are showing greater price sensitivity and becoming increasingly selective, which is likely to keep sales velocity measured. Full-year private home price growth is forecasted to land between 3% and 4%.