Rents and prices of private homes fell by 1.9% during Q1

Easing rents

Rents fell by 1.9 per cent during Q1, following a decline of 2.1% in the previous quarter.

Analysts have predicted that “abundant construction” will occur in 2023. Last year, excluding ECs, about 19,968 homes were finished, which was the highest number of completed units since 2016.

In the first four months of 2018, only 241 housing units were finished, primarily at the Meyer Mansion (200-unit freehold) in District 15. Net completed stock shrank by 188 apartments, likely because projects sold for development were demolished.

The vacancy rates fell by 6.8 percentage points to end-Q1 from 8.1 in Q4.

Analysts believe that this trend is likely to continue, as demand slows down and the housing stock increases.

Singapore’s prices for private housing rose at their lowest quarterly pace in three years. Home sales were down, the supply was expanding, and rental rates fell in the first half of 2024.

Analysts predict that pressure will continue to be exerted on the private housing market in the next few months, due to the fact that both the demand for home purchases and rentals has weakened amid the current economic uncertainty.

Urban Redevelopment Authority data released on April 26 showed that residential property prices in the private sector rose by 1.4% during the first four months of 2024. This was a bit lower than the 1.5% flash estimate released by the agency in early April, but followed an increase of 2.8% the previous quarter.

The increase is the slowest since Q3 of 2021 when there was a 1.1% rise

Rents decreased by 1.9 % in Q1, which is a continuation of the decline that occurred in the previous quarter.

The slowdown in price growth reflects a cautious stance taken by homebuyers who are wary of “higher prices amid slower wage growth, and weaker economic conditions”.

The price of private houses has risen 34.4% since the Covid epidemic began.

As interest rates rise and ABSD (additional stamp duty for foreigners) is imposed at 60 percent, it appears that there will be more resistance to price increases. Developers’ sales in 2023 reached 6,421 unit, the lowest level for 15 years.

Song noted that in Q1, the inventory of uncompleted (non-EC) units jumped 17.8 percent to 19,936 from 16,929 units at Q4 2023. Unsold inventories rose 17 percent to 20,204 in Q1.

Home prices rose the most in the first three months of 2024. This was due to the increased value of landed property, up 2.6% compared with the previous quarter’s 4.6%.

Prices of non landed properties increased by 1% during Q1, up from a rise of 2.3 % in the previous three months

Prime Core Central Region Prices (CCR), up by 3.4 percent, drove Q1 price increases. Rest of Central Region, and Outside Central Region, saw gains of only 0.3 and 0.2 percent, respectively.

The public launch by Watten House at the CCR seemed to have increased sentiment within the segment. Projects such as Perfect Ten, and Leedon Green were seeing higher median sales prices.

CCR buyers could move prices up to catch-up with other regions. CCR price growth between 2021 and 2030 was only 11 percent, a significant difference from other regions which saw a 30 percent increase.

The overall volume of sales fell 2.4% in the first quarter for a third consecutive time to 4,230. Re-sales fell by 5%, to 2,689 pieces. Sub-sales also dropped by 8.3%, to 377 pieces.

The only improvement was in the new market, where volume increased by 6.6% from Q4 to 1.164 units. In Q1, developers offered more private residences for sale than in Q4 (1304 units, exclusive of executive condominiums).

Still, in Q1, the uptake of new products slowed. Take-up rates for new launches of more than 100 items were around 39 percent, compared with 54 percent one year ago.

This is the lowest level for sales in the first three months of the year since Q1 2008. 762 units of cars were sold

Developers could also be pricing units at an affordable level to appeal to local customers. In Q1, the median sold price of new non landed private homes, excluding ECs, was S$1,96m, down from S$2,15m the previous quarter.

On the basis of expected completion dates for 2024, 10561 private houses, including ECs are scheduled to be ready in the remaining third quarters. The completion of another 6,316 housing units is expected in 2025.

Analysts expect that rents in the future will further decline.

Rents can fall by as much 5 percent due to an increase in housing stocks, a decrease in the number of incoming foreigners and budget constraints for the tenant pool.

Rents might stabilize by next year because new completions between 2025-2026 will average 6,691 per annum, a much smaller number than the decade long average of 13,275.

However, a healthy number of new launches is likely to stimulate demand and market activity.

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