Private home prices increased 2.8% during Q4 but rents dropped 2.1% due to more housing completions

Urban Redevelopment Authority published data on the rise in prices of private residential real estate during Q4 of 2023. The updated Q4 Price Index was slightly higher that the flash estimate earlier this year of 2.7%, following an increase by 0.8% the previous three months.
Prices rose 6.8 per cent for the entire year. The seventh straight year for price growth is a slower rate compared to the 8.6% in 2022, and the 10.6% in 2021.
Analysts predict that Singapore’s real estate market could have reached its peak. The private home price flattening, and the rents dropping for the third time in a row in the fourth-quarter of 2023, may indicate this.
The low volume of transactions is primarily due to high interest and rising prices on resale home. In the fourth quarter, median prices for resale housing rose 2.8%. New projects also achieved higher prices. Median prices have risen by 8.8% for the whole year.
Investor demand for homes has also decreased following the rise in Additional Purchaser’s Stamp duty. Most of these properties are being purchased to be occupied or rented out long term.
Rents, however, declined by 2.1% for Q4 while registering an 8.7% annual growth rate, much lower than 2022’s 29.7%.
This slowdown is due to the high interest rate environment, repeated cooling measures and a slower overall demand.
The imbalance caused by a high demand and a low supply of housing will be rectified at the end 2023.
In 2023, excluding ECs and private homes, 19,968 were completed – the highest total since 2017, with 20,648. This is above the average annual unit count of 12,600 over the past decade.
The Q4 quarter was marked by a smaller number of completed units, only 4,085 in total. As a result, the vacancy rate decreased to 8.1% at the end of Q4 from an earlier 8.4%.
This led to the overall index of rental falling by 2.1% in Q4, marking the first fall in more than three-years.
Rents have dropped by 5.2% since the second quarter of 2009 following the global recession.
Prices of nonlanded properties rose by 2.3% during Q4 2023 compared to a 2.2% rise the previous quarter. The non-landed property prices rose by 6.6 percent in 2018, down from 8.1 percent in 2012.
In Q4, the number of private homes launched by developers, excluding ECs and marketed in the first market, was 1,060. This was less than one-half of Q3’s 2,805 unit launch. 7551 units are still being offered for 2023. That’s a significant increase from the 4,528 that were available in 2022.
As a result, the number of new sales fell 44.9% to 1,092 in Q4 from 1,946 in quarter 3. Six thousand four hundred twenty one units have been sold for the entire year 2023. This is down from seven thousand nine hundred units the previous.
As for resale transactions, they were stable with 2,831 unit sales in Q4, a drop of 2.4% compared to the 2,900 units sold in Q3. These deals made up 65.3% out of the total number of sales transactions in quarter four, an increase over 55.8% from Q3.
In 2023, 11,329 resale deals were made, compared to 14,026 sales in the year 2022.
11793 private homes, including ECs and ECs will be completed this year. In 2025 another 6,747 will be ready.
The completion of around 18,500 residential units is expected between 2024-2025. By 2025, the public and privatized housing will have reached close to 100 000 units.

Prices are likely to stay high, but remain stable, in H1-2024. This is due to the geopolitical uncertainty as well as the high interest rate environment. Demand should be steady, despite a subdued level.
Homeowners who had to temporarily leave the market due construction delays, can now move into their newly-completed homes. Due to an increase in rental options, prospective tenants are now in a better position in their lease negotiations.
Landed property prices led the way in rising home prices last quarter. Home prices in the landed sector rose 8 percent for the whole year. However, this is slightly slower than gains of 9.6percent in 2022.
Analysts are therefore expecting prices to rise 3 to 5 percent in 2024.
Despite the fact that there are many projects being completed, and leasing demand is softer than usual, rents are likely to fall. In 2024 there will be a higher burden of property tax, but landlords won’t pass that on to tenants because the rental market is slowing.

Private home prices increased 2.8% during Q4 but rents dropped 2.1% due to more housing completions.

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