New Project Launches Drive Local Private Home Prices, Up 2.7% in Q4 Last Year

New private home launches in the fourth quarter of last year drove an acceleration in overall private residential prices locally, rising 2.7% quarter-on-quarter. However, full-year price growth moderated to 6.7%.

Analysts believe this indicates that the market is stabilising year by year, with price growth expected to slow further this year.

Flash estimates released by the Urban Redevelopment Authority (URA) on Tuesday (2 January) showed that the overall private home price increase in the fourth quarter outpaced the 0.8% rise in the third quarter. Full-year private home prices rose for the seventh consecutive year, though the pace was lower than the 8.6% recorded in 2022.

Several new project launches in the fourth quarter drove non-landed private home prices up by 2.2%, matching the growth seen in the third quarter; for the whole of last year, prices rose 6.5%, easing from the 8.1% gain in 2022.

Non-landed private home prices in the Outside Central Region (OCR), representing the mass market, posted the largest gain in the fourth quarter, rising 4.6% quarter-on-quarter. Prices in the prime Core Central Region (CCR) climbed 4.2%, while prices in the city-fringe Rest of Central Region (RCR) dipped 1.2%.

On a full-year basis, high-end and mid-tier non-landed private home prices grew by 2.1% and 2.7% respectively last year, down from the 4.8% and 9.7% gains logged in 2022. In contrast, mass-market home prices accelerated by 13.8% last year, surpassing the 9.3% increase recorded in the previous year.

The accelerated price increase in the fourth quarter was primarily driven by three new private residential projects launched in November: Hillock Green, J'den, and Watten House.

This indicates strong local demand, while many foreign buyers retreated after the Additional Buyer's Stamp Duty (ABSD) was raised to 60% in April last year. Singapore Citizens and Permanent Residents accounted for 98.5% of total private home transactions in the fourth quarter, with foreign buyers picking up only 1.5% of units.

Full-year private home price growth came in lower than in 2022, reflecting a notable slowdown that signals the pandemic-fuelled price surge has ended as the market moves towards stability.

Notably, landed home prices rebounded by 4.5% quarter-on-quarter in the fourth quarter, reversing a 3.6% contraction in the third quarter.

Analysis: Landed homes expected to remain favoured by local buyers

Many buyers desire larger indoor and outdoor living spaces. The landed housing market is expected to remain supported by local buyers this year, although limited supply could weigh on transaction volumes.

In terms of transaction volume, overall private residential sales in the fourth quarter (up to mid-December) fell 27% quarter-on-quarter to 3,800 units; full-year volume slipped 15% to 18,510 units, marking the lowest level since 2016.

Private housing supply under the Government Land Sales (GLS) programme has increased, with Confirmed List supply surging by around 50% last year to 9,250 units. Supply for the first half of this year will rise further to 5,450 units, up from 5,160 units in 2H last year and 4,090 units in 1H last year.

URA noted that these additional private residential units are expected to be launched for sale starting this year, catering to market demand and helping to keep prices in line with economic fundamentals.

URA also highlighted that global economic activity is expected to slow further this year, while domestic mortgage rates are projected to remain elevated. Homebuyers should continue to exercise prudence in debt financing, including servicing long-term mortgages.

Developers are anticipated to price new project launches sensitively according to prevailing market conditions to drive take-up this year, with demand largely underpinned by local owner-occupiers.

Full-year private residential prices are forecast to rise between 3% and 4% this year, with total transaction volume projected at between 13,000 and 14,000 units.