Q3 Private Home Sales Drop 15%! Market Has Slowed, Price Increase Expected to Be Temporary

Total private residential sales volume in Singapore fell by 15% quarter-on-quarter in the third quarter, but private home prices rebounded from a previous decline, rising 0.5% quarter-on-quarter. Analysts noted that this price increase is likely temporary as the broader market has already cooled.

Flash estimates released by the Urban Redevelopment Authority (URA) showed that the overall private home price index in 3Q reversed the 0.2% decline seen in the previous quarter. Rising home prices dampened buying sentiment, causing total private home transaction volumes to tumble 15% quarter-on-quarter and 26% year-on-year in the third quarter.

Non-landed private home prices rose by 2.1% in 3Q, reversing the 0.6% contraction recorded in the prior quarter.

Mid-Tier and Mass-Market Home Prices Supported by Local Owner-Occupier Demand

The increase in condo prices was primarily driven by demand from local owner-occupiers supporting prices in the Rest of Central Region (RCR), representing mid-tier private homes, and the Outside Central Region (OCR), representing mass-market properties. However, a decline in Core Central Region (CCR) prices, which represent luxury prime homes, partially offset the overall price growth.

Mass-market home prices continued their upward momentum, climbing 5.1% in 3Q compared to 1.2% in 2Q. Mid-tier home prices rebounded into positive territory, advancing 2.3% in the third quarter; conversely, luxury prime home prices accelerated their decline, widening from a 0.1% dip in 2Q to a 2.6% drop in 3Q.

Analysis: 3Q Price Rebound Likely Driven by Higher Proportion of New Launches

The price rebound was likely propelled by a higher proportion of new launch private home sales in the third quarter, as new project units typically command higher price points.

Although prices picked up in 3Q, overall price appreciation remained lower than in previous years. The third quarter saw multiple new project launches, including Grand Dunman, Lentor Hills Residences, The Myst, and Pinetree Hill. These launches drew substantial buyer interest and buoyed sentiment across the private housing market.

Active New Launch Market with Abundant Choices: 1,412 Units Sold in July

The new private residential market was buoyant in 3Q, with developers moving 1,412 units in July alone.

At least eight new private residential projects were available for prospective buyers, pointing to an accelerated pace of new launches entering the market. Consequently, homebuyers enjoyed a wider variety of options and purchasing opportunities across diverse condo locations.

The consecutive two-quarter fall in luxury prime home prices suggests that the government's tighter Additional Buyer's Stamp Duty (ABSD) measures targeting investors and foreign buyers are taking effect. Additionally, the recent money laundering scandal has dealt a significant blow to sentiment in the luxury property segment.

Landed Home Prices Drop 4.9%; Experts Note Supply Remains Tight and Local Demand Stays Resilient

In the landed property segment, prices fell 4.9% in 3Q—a sharp contrast to the 1.1% gain in the previous quarter—snapping an eight-quarter streak of price growth.

However, landed home prices are unlikely to see sustained declines, given that the supply of such properties remains constrained and demand from local buyers remains robust.

Overall, the private residential market demonstrates strong resilience, underpinned by a low domestic unemployment rate and rising HDB resale prices, which continue to support HDB upgraders moving into private homes.

Nevertheless, property cooling measures, an uncertain economic outlook, and elevated mortgage interest rates will continue to curb overall buyer demand. Disconnects between buyers' and sellers' price expectations are expected to widen, which could weigh further on overall transaction volumes.

URA noted that private home prices increased by an average of 0.2% per quarter over the past two quarters, noticeably lower than the quarterly average increase of 2.1% recorded throughout last year.