Growth in Singapore private home prices and rentals slows in 2023

SINGAPORE – There were more signs of price stabilisation in Singapore’s private residential market in the fourth quarter, as buyers turned cautious in the face of higher interest rates, recent cooling measures and macroeconomic uncertainty.

In the leasing market, quarterly rentals fell for the first time in three years, easing across all submarkets as the number of private housing units completed hit 21,284 in 2023 – more than twice the number of completions in 2022 and the highest in a year since 2016.

The Urban Redevelopment Authority’s (URA) overall private home price index rose 2.8 per cent quarter on quarter in fourth quarter 2023, above the 2.7 per cent increase in flash estimates released earlier in January. In the third quarter of 2023, prices had risen by 0.8 per cent.

Analysts cited record high prices achieved by two new major launches in November – J’den in Jurong East which sold 323 units at an average price of $2,451 per square foot (psf), while Watten House in Bukit Timah moved 102 units at an average price of $3,230 psf.

For the whole of 2023, prices of private residential properties rose 6.8 per cent, moderating from an 8.6 per cent increase in 2022.

This was due in part to a rebound in prices of landed property prices by 4.6 per cent in the fourth quarter, reversing a 3.6 per cent drop in the previous quarter.

Cumulatively, landed home prices gained 8 per cent for 2023 – the sixth straight year of price growth – compared with a 9.6 per cent increase in 2022. For the non-landed residential market, prices rose by 6.6 per cent in 2023, moderating from a growth of 8.1 per cent in the previous year.

But there are signs of growing price resistance as overall resale volumes fell 2.4 per cent to 2,831 units in the fourth quarter from 2,900 units in the third quarter, and new condo sales shrank even as developers launched more units in 2023.

Developers sold 1,092 units in the fourth quarter, a 44 per cent drop from 1,946 units moved in the third quarter, taking the total to 6,421 units in 2023. This is a 9.6 per cent drop from 7,099 units sold in 2022 – the lowest annual tally in 15 years, since 4,264 units were sold in 2008.

The drop occurred despite developers launching about 67 per cent more stock in 2023 with 7,551 new units, compared with 4,528 units in 2022.

With up to 40 new projects potentially offering around 12,000 units expected to come on stream in 2024, more buyers may stay on the sidelines as they evaluate options and wait for prices to moderate further, Colliers Singapore’s head of research Catherine He said.

“Mixed-use projects and well-located projects near amenities might still do well, but projects without a compelling proposition might struggle to get decent take-up of at least 50 per cent,” she added.

Cushman’s head of research for Singapore and South-east Asia Wong Xian Yang noted that unsold new home supply could increase further in the face of the sizeable 2024 launch pipeline.

“Nonetheless, we do not expect a fall in new launch prices given still-high development costs and low unsold inventory,” he added.

Prices of non-landed properties increased by 2.3 per cent in the fourth quarter, up from a 2.2 per cent gain in the previous quarter, driven by price growth in the prime district and suburbs.