Singapore Luxury Home Sales Fall, but Prices Remain Stable

A recent research report indicates that Singapore's luxury residential market continued to soften in the first half of 2023 (1H2023), weighed down by aggressive interest rate hikes from the US Federal Reserve and a worsening macroeconomic backdrop. Transaction volumes for both Good Class Bungalows (GCBs) and luxury apartments declined in 1H2023, mirroring trends in the broader property market.

In the GCB market, a total of 13 Good Class Bungalows were transacted in 1H2023 with a total value of $525.3 million. This represents a 14.4% decline compared to 2H2022 (18 GCBs valued at $613.5 million) and a 30.1% year-on-year drop compared to 1H2022 (29 GCBs valued at $751.42 million).

CBRE highlighted that GCB prices remained resilient, climbing 31.1% compared to 2H2022 to reach $2,760 per square foot (psf) in 1H2023.

In the luxury apartment segment, 92 units were transacted in 1H2023 with a total sales value of $964.7 million, down from 106 units valued at $1.085 billion in 2H2022. While luxury apartment sales picked up in the first four months of the year following China's border reopening in early January, transactions slowed in May and June after the Additional Buyer's Stamp Duty (ABSD) for foreign buyers doubled to 60%, effective from 27 April.

Nevertheless, prices held firm despite the drop in transaction volume. The average price of luxury apartments rose 1.1% from $3,425 psf in 2H2022 to $3,463 psf in 1H2023.

Over at Sentosa Cove, real estate sales also softened compared to 2H2022. Seven Sentosa Cove bungalows were sold in 1H2023 for a total of $139.4 million, down 32.8% in value compared to the 10 bungalows transacted in 2H2022 ($207.5 million). For Sentosa Cove condominiums, 50 units were sold in 1H2023 for $251.1 million, reflecting a 29.8% decline in value from the 74 units sold in 2H2022 ($357.6 million).

Compared to 2H2022, average prices for both bungalows and condos in Sentosa Cove increased in 1H2023, with bungalow prices rising 11.9% to $2,214 psf and condominium prices edging up 1.7% to $2,063 psf.

Looking ahead, transaction volumes in the luxury residential sector are expected to remain subdued for the remainder of the year. This can be attributed to a combination of factors, including the prevailing cooling measures, an uncertain macroeconomic outlook, and elevated interest rates, which are likely keeping investors in a wait-and-see mode.

However, existing luxury homeowners are likely to support market pricing, as healthy rental yields and a limited pipeline of new luxury homes provide little incentive for them to offload their assets.