Singapore’s private residential property index ascends 6.7% in 2023 amidst market fluctuations

The Urban Redevelopment Authority (URA) disclosed its preliminary figures for the private residential property index in the fourth quarter of 2023 on 2 January 2024.

The statistics reveal a 2.7% increase from the previous quarter, culminating in an annual rise of 6.7% for the entire year.

This upward trend, however, represents a slowdown from the robust 8.6% increase witnessed in 2022. The quarter saw sale transaction volumes decreasing by about 27%, with the annual transactions falling by approximately 15% compared to the previous year, marking the lowest figure recorded since 2016.

Further dissection of the data indicates that non-landed property prices rose by 2.2% in the fourth quarter. This rise was primarily propelled by robust sales in newly launched projects.

Throughout 2023, these properties experienced a 6.5% increment, showing a deceleration from the 8.1% increase observed in 2022. Specific regions such as the Core Central Region (CCR) and Rest of Central Region (RCR) reported increases of 2.1% and 2.7% respectively.

In response to the evolving market dynamics, the Government has escalated the supply of private housing on the Confirmed List to 5,450 units for the first half of 2024.

This move marks a significant increase from the 5,160 units in the latter half of 2023 and represents the most substantial supply in a single Government Land Sales (GLS) Programme since the second half of 2013.

The URA emphasizes that these flash estimates are based on transaction prices in contracts submitted for stamp duty payment and data on units sold by developers up until mid-December 2023.

They caution that the final statistics, due for release on 26 January 2024, could significantly differ from these preliminary numbers, especially when the changes are marginal.

Moderate deceleration of rental yields as property taxes rise: Analyst 

Dr Tan Tee Khoon, the Country Manager for Singapore at PropertyGuru, offers a nuanced interpretation of the URA’s recent findings. He points out, “Residential private property prices increased 2.7% in Q4 2023, signaling that we are possibly approaching the peak of the market trend.” He further notes the peculiar yearly fluctuation, where a modest rise and a slight dip were observed in the preceding two quarters.

Dr Tan remarks on the typical end-of-year market behaviour, stating, “Transaction activity tends to be slower in the fourth quarter due to year-end school holidays, notwithstanding the impact of new launches.”

He underscores a general trend of declining transactions in 2023 compared to the previous year, attributing part of this downturn to the significant impact of the property cooling measures introduced in April 2023 on foreign buyers.

Highlighting the performance of the OCR, Dr Tan shares, “OCR saw modest price growth due to the strong performance of OCR condo launches.”

He points out the exceptional sales of J’den and Hillock Green, contributing significantly to the 4.6% price increase in the OCR for Q4 2023.

“Year-on-year, the OCR is expected to be recognized as the region with the highest price growth,” he adds, correlating this trend with growing buyer interest in OCR properties, particularly those near MRT stations.

Looking forward, Dr Tan anticipates, “In the first six months of 2024, property prices are expected to remain high yet stable. Demand, while subdued, should maintain a consistent upward trajectory.”

He predicts a moderate deceleration in the rental sector, which may influence property seekers looking for rental yields as property taxes rise.

Despite these challenges, he believes, “The inherent stability of Singapore’s housing market is likely to continue resonating favourably with both investors and homeowners.”