PropertyGuru: Singapore residential property market is experiencing a slow down in sales and rentals

SINGAPORE: According to PropertyGuru’s “Singapore Property Market Report Q3 2023,” the residential property market in Singapore is showing signs of deceleration due to the impact of high interest rates and cooling measures, which are putting strain on prices and demand.

While asking prices remain elevated, some sellers with urgent needs have been observed to be willing to lower their prices.

However, this trend may not be widespread, given the competitive nature of the labor market and the successful avoidance of a technical recession.

From PropertyGuru “Singapore Property Market Report Q3 2023”

In its Q3 report released on Monday (7 Aug), the findings highlight a moderation in the rental market alongside an uptick in supply.

Although asking rents remain in proximity to historical peaks, there are indications that landlords, particularly those who are new to the market, are open to agreeing on reduced rental rates.

This trend is likely due to first-time landlords opting to lease out extra rooms as a means to support their mortgage payments.

Conversely, new prominent condominium launches consistently demand premium prices. Integrated developments and properties conveniently situated near employment hubs and amenities hold particular appeal for potential buyers.

PropertyGuru Singapore country manager Tan Tee Khoon said homebuyers are becoming more judicious in their decisions.

“It is likely they would channel their financial resources to only one property for own-stay purposes. Consequently, their expectations of that property are bound to rise.

“We anticipate buyers gravitating towards projects that meet most, if not all, of their criteria and be willing to pay more for it.

“So, let this be an inspiring call to action for developers to create properties that not only tick the boxes, but also truly meet the evolving needs and aspirations of prospective homeowners,” he said.

To “promote a sustainable property market” and “prioritise housing for owner-occupation”, Singapore government announced the implementation of increased Additional Buyer’s Stamp Duty (ABSD) rates effective from 27 April.

These increased ABSD rates were the steepest increase among the cooling measures implemented, affecting Singaporean Citizens and Permanent Residents (PRs) buying their second or subsequent properties, as well as for foreigners, entities, and trustees.

The report said these measures effectively slowed down demand and transaction volumes.

The pace of private residential property sales decelerates

Based on the real estate data encompassing the second quarter of 2023 (Q2’23) furnished by the Urban Redevelopment Authority of Singapore, the Property Price Index for private residential properties has recorded its initial decrease in a span of three years, amid a decline in sales velocity.

While resale transaction volumes may have slowed down, prices for new launch condos are likely to hold steady.

“Buyers are willing to pay a premium for new homes and to meet the new benchmark prices for projects or integrated developments with easy access to amenities, transportation networks, and schools,” the report said.

From PropertyGuru “Singapore Property Market Report Q3 2023”

Rental market experiences cooling trend as median asking rents ease

A gradual decline in median asking rents has signaled a cooling trend within the rental market.

The local demand for rental properties has diminished, owing to the surge in completed properties within both the public and private property sectors.

Demand from expatriates has been insufficient to bridge this gap and keep rental prices buoyant, as companies remain cautious about hiring in the current uncertain economic climate.

“As more private residential projects reach completion, the additional supply will likely push rents downwards, a trend we expect to carry on into 2024.

“Given the announcements on the increased land supply for private residential housing in the second half of 2023 (H2’23) Government Land Sales (GLS) programme, as well as the future redevelopment of the Singapore Turf Club site and Jurong Lake District area, we can also expect demand for private residential properties to dip as a whole,” it said.

From PropertyGuru “Singapore Property Market Report Q3 2023”

From PropertyGuru “Singapore Property Market Report Q3 2023”

Expect fluctuating property sales prices in the second half of 2023

The Singapore Property Sale Price Index indicates that the median asking prices of listings on the PropertyGuru website witnessed a 1.0% uptick from the first quarter of 2023 (Q1’23) to the second quarter of 2023 (Q2’23), building upon a preceding 0.7% rise observed from the fourth quarter of 2022 (Q4’22) to the first quarter of 2023 (Q1’23).

“This is contrary to the initial flash estimates from URA and HDB, which indicate that prices could be decreasing. However, there is an explanation.

“In this high-price, high-interest-rate environment, sellers are typically still holding firm or raising their asking prices. While some decrease in demand was expected, the relatively small drop suggests that demand is still fairly strong and the pricing expectation gap remains a significant barrier to transaction.

“But more are willing to accept a lower price to complete the sale of their property in Q2 2023, especially if they needed to do so to avoid incurring the higher ABSD rates.

“This contrast between asking and transacted prices suggests we could see prices oscillate between slight increases and decreases in subsequent quarters,” it said.

In the second quarter of this year, the pace of growth in asking prices for HDB resale flat listings decelerated.

The Singapore Property Sale Price Index for HDB resale flats displayed a 0.6% quarter-on-quarter (QoQ) expansion, in contrast to the 1.6% QoQ surge observed in the preceding quarter (Q1).

In contrast, the Singapore Property Sale Demand Index for HDB resale flats underwent a decline of 6.4% in Q2’23. Meanwhile, the Sale Supply Index for HDB resale flats remained relatively steady, experiencing a minor 0.1% uptick.

“These numbers suggest that the government’s efforts to control the market by introducing cooling measures and increasing BTO flat supply, have been successful in maintaining stability.

“Considering that the Sale Demand Index can be interpreted as an early indicator of market trends – as it reflects buyer interest at the beginning of their property search – these figures hint that the HDB resale market may have reached its peak.

“As it is, the HDB resale market has showed a decline in activity, with transaction volumes dropping 5.7% QoQ and 4.0% year-on-year (YoY). HDB’s resale data for Q2 2023 also indicate a modest 1.5% QoQ price increase, lower than the average quarterly growth of 2.5% in 2022,” it said.

From PropertyGuru “Singapore Property Market Report Q3 2023”

Asking prices for landed and non-landed homes are expected to moderate

Indications of a deceleration in price growth have emerged, evident in the URA’s Property Price Index of private residential properties, which recorded a 0.4% quarterly decline. A comparable trend is observable in the overall asking prices for private properties on PropertyGuru.

Throughout Q2’23, the median asking prices for listings of landed homes on PropertyGuru exhibited a 1.2% quarter-on-quarter (QoQ) reduction. This marks the initial instance of price contraction since Q4’19.

“Demand for landed homes have also softened, with the Sale Demand Index for landed homes dropping by 3.1% from the previous quarter.

“Despite higher Buyer’s Stamp Duty (BSD) and ABSD rates dampening demand and, in turn, asking prices, for landed homes, this does not suggest a downturn but rather a stabilisation of the market.

“Asking prices for landed homes are still at a high and supply has not returned to prepandemic levels,” it said.

On the other hand, the Sale Price Index for non-landed private residential properties saw a modest 0.3% increase, a slightly smaller growth than the 0.9% increase from Q4’22 to Q1’23.

The Sale Demand Index for non-landed private property decreased by 2.3% QoQ, while the Sale Supply Index for non-landed private property fell by 2.3% QoQ, after a significant 26.1% QoQ increase in the previous quarter.

These figures support the idea that the market is reaching its peak and we can expect prices to stabilise in the coming quarters.

Moving forward, in 2024, buyers are likely to have more options.

The government has increased the supply of private housing in the second half of 2023 (H2’23) GLS programme’s Confirmed List, offering 5,160 units, up from 4,090 units in the first half of 2023 (H1’23) GLS programme.

From PropertyGuru “Singapore Property Market Report Q3 2023”