Singapore’s private house prices rose at the slowest pace quarterly in nearly three years as home sales slowed and supply increased. Rents also fell in the first quarter 2024.

Analysts say that the downward pressure on the residential private market will continue to increase in the months ahead as homebuying and rental demand decreases amid economic uncertainty.

The Urban Redevelopment Authority released figures on Friday, April 26th. They showed that prices of residential properties in private hands rose by 1.4 percent during the first quarter 2024. The agency’s earlier estimate of 1.5 percent was slightly lower. It followed a rise of 2.8% in the prior quarter.

The Q3 2021 increase of 1.1 percent was the smallest quarterly increase since Q3 2000.

Rents dropped by 1.9 percent in Q1, continuing the decline of 2.1 percent in the previous quarter.

The slowdown in price growth is a reflection of the cautious attitude amongst homebuyers toward high prices, despite slower wage growth.

Since the Covid pandemic began, private home prices are up 34.3%.

The increased interest rates, coupled with the 60 percent ABSD (additional buyer’s stamp duty) for non-residents that will be effective in late April 2023, have led to a growing resistance against high prices. The developers’ sales for 2023 were 6,421 units – a 15-year-low.

Uncompleted units (excluding ECs), which comprised the bulk of unsold inventory, increased 17.8 percent in Q1 from 16,929 to 19,936 units. Unsold inventory including completed units rose 17 percent to 20,204 in Q1.

In the first quarter 2024, landed properties saw the largest increase in home prices. They rose by 2,6 per cent compared to 4,6 per cent the previous quarter.

The price of non-landed property rose by 1 percent in Q1, as opposed to the 2.3% increase in the previous quarter.

Prices in the Core Central Region (CCR), which are at their highest, rose by 3.4%. Comparatively, Outside Central Region and Rest of Central Region only saw modest gains of 0.3% and 0.2%, respectively.

The launch of Watten House, in the CCR, appeared to have improved sentiment. Existing projects like Perfect Ten and Leedon Green saw transactions at higher prices.

CCR prices could catch up to other regions if you buy in CCR. CCR prices are expected to grow by 11 percent between 2021 and 2023. This is a far cry from other regions, where prices have increased over 30 percent.

In Q1, the overall sales volume fell by 2.4% for the third consecutive quarter, to 4,230 units. The number of resale units fell by 5 percent to 2,689, and the number of sub-sales dropped by 8.3 percent to 377.

In Q1, the new sales market was only improved by 6.6%, as volume increased to 1,164 units. Developers launched more private homes to be sold, with 1,304 units, excluding executive condos, compared to Q4’s 1 060 units.

The take-up rate of new launches did slow in Q1. The take-up of new launches with over 100 units was around 39%, compared to 54% a year ago.

The lowest sales level in the first quarter since Q1 2008 when 762 units sold.

Developers are also more conservative when bidding for land and may be pricing their new units more affordably to attract local buyers. In Q1, median transaction price for new non-landed homes (excluding ECs), was S$1,96 million. This is down from S$2,15 million the previous quarter.

Rents fell 1.9 percent in Q1, continuing the decline of 2.1 percent in the previous quarter.

Last year, excluding ECs and private homes, 19,968 units were completed. This is the highest number since 2016, when 20,803 units were completed.

Only 241 units have been completed in the first quarter, mostly at the Meyer Mansion, which has 200 freehold apartments, located in District 15. The net completed stock has actually decreased by 188 units. This is probably because of the demolitions of projects that were sold for redevelopment.

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As a result, the vacancy rate fell from 8.1% in Q4 to 6.8% at end-Q1.

According to the expected completion dates, 10,561 homes including ECs will be completed in the final three quarters 2024. In 2025, another 6,316 units will be completed.

Analysts predict that rents will continue to decline in the months ahead.

Rents could fall by up to 5% this year due to the increased housing stock, the lower number of expats moving in and the possible budget constraints that tenants may be facing.

Rents could stabilize by the end of next year, as new completions for 2025 and 2026 are expected to be much lower than the average over the past decade of 13,275 units.

Rents remain 52 percent above the last trough of Q3 2020. She believes that CCR rents will continue to drop with the increase in vacancy and completions of substantial projects by 2024 .

A healthy pipeline of new projects should still stimulate the market and encourage homebuying.