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

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

Singapore’s house prices grew at the slowest quarterly rate in three years. Home sales were down, while supply was up and rents decreased in the 1st quarter of 2024.

Analysts have said that downward pressure on private residential markets is likely continue in coming months due to the fact that both home buying demand and rental demands are expected to moderate amid the economic uncertainty.

Urban Redevelopment Authority statistics released Friday (Apr. 26) revealed that private residential property values rose 1.4% in 2024’s first quarter. The 1.4 percent figure was a bit lower than the agency’s 1.5 percent flash estimate earlier this week, but it followed a 2.8 percent rise in the previous three months.

The 1.4 percent increase is the smallest gain in a quarter since Q3 of 2021 when it had a 1.1% rise.

Rents fell by 1.9 percentage points in Q1, following a 2.1 percentage point decline in the quarter before.

The slower price increase reflects the cautious stance of homebuyers who are wary about high price levels in an environment where wages have been stagnant and economic conditions are softening.

Private home prices rose by 34.4% following the Covid pandemic.

This has led to an increase in the resistance of foreigners towards high-priced homes, especially with higher interest and the imposition of a 60 percent ABSD for foreigners that takes effect late April 2023. As a result, developer sales for the full year 2023 fell to 6,421 housing units. This was a 15 year low.

Unsold stock of uncompleted unit (excluding ECs), jumped 17.8 % to 19,936 in Q1, from 16,929 in the Q4 of 2023. Unsold stock, which includes completed units as well, increased 17 percent to 20,204 unit in Q1.

In the first half of 2024 the price of homes rose most rapidly for landed property, rising by 2.6%.

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Prices of nonlanded properties rose by 1% during the first quarter, compared with a 2.3% jump in the previous period.

Prime Core Central Regions (CCRs) were responsible for price gains of 3.4% in Q1. Rest of Central Region & Outside Central Region both saw modest increases of 0.3 % and 0.2 %, respectively.

The public release of Watten House within the CCR segment appeared to be a boost for sentiment. Existing developments such as Perfect Ten or Leedon Green have seen transactions at higher media prices.

CCR buying could bring prices in line with other regions. CCR prices increased by approximately 11 percent between 2021-2023. They are far behind other areas where prices have grown over 30 percent.

The total sales volume in Q1 was down by 2.4%, the third consecutive quarterly decline. It fell to 4,230 items. In Q1, resale transactions fell by 5%, from 2,689 to 377 units.

In Q1, only the new sales market improved. Volume was up 6.6% at 1,164 units. It was because developers began to offer more private homes, 1,304 units except for executive condominiums. This is a significant increase from the 1,060 units in Q4.

Yet, the Q1 take-up of newly launched products has slowed. A new launch with more than one hundred units saw a take-up percentage of about 39 per cent compared to 54 per cent a year before.

This is also the lowest sales volume recorded in the Q1 of this year since Q1 of 2008, when 762 vehicles were sold.

Developers also have become more conservative in their bidding on land. They may price new units at an affordable level to attract local customers. In Q1, median transacted prices for non-landed private homes, excluding ECs (excluding ECs), dropped from S$2.15million in the previous quarterly.

Rents, however, declined 1.9 percent in Q1, following a decline of 2.0 per cent the quarter before.

Last year, excluding ECs, there were 19,968 private houses completed, which was the most since 2016 when 20,803 homes were finished.

In the quarter ending March 31, only 241 completed units were delivered, with the majority of them being the Meyer Mansion (200-unit freehold) in District 15. The total number of completed units has decreased by 188 due to the demolition and redevelopment of some projects.

The vacancy rate dropped to 6.8 percent at the end-of-Q1 from 8.1 percent in Q4.

10561 private homes including ECs should be completed within the last three quarters in 2024. Sixty-three units will be ready in 2025.

Analysts expect rental rates to ease further in the coming months.

Read more: Kent Ridge Hill Residences by Oxley

Rents may drop up to 5 percent in this year as a result of an increase in housing stocks, a decrease in the number of incoming foreigners and possible budget restrictions for existing tenants.

Rents may stabilize next year due to the fact that new completions of 2025 and 2020 will be about 6,691 each per annum. This is much less than a decade-long average 13,275 units.

Rents have risen 52 per cent since Q3 2019. She expects CCR rentals to fall further with elevated vacancy and substantial completions 2024 .

Yet, a healthy portfolio of new project launches can stimulate the demand for housing and boost market activity.

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