_Prime Non-Landed and Landed Residential Market Update H2 2022

Key Highlights

Prime Non-Landed Residential

• There were 158 prime non-landed transactions in H2 2022, totalling S$1.4 billion. While total sales value increased 18.5% from H1 2022, the cumulative sales in 2022 fell 36.4% to S$2.5 billion against the almost S$4.0 billion recorded in 2021.
• The low interest rate environment then encouraged buyers to make their purchases sooner-rather-than-later, but the present high interest rates have now checked buyers.
• A total of 296 luxury non-landed homes were sold in 2022, substantially lower than the 487 transactions recorded last year. The lack of family-sized units for sale resulted in the decline as owners grew cautious about selling before a replacement home is secured.
• Notwithstanding the drop in transaction volume, luxury non-landed home prices continued to rise, increasing 5.7% y-o-y from S$2,360 psf in H2 2021 to S$2,495 psf in H2 2022 as demand remains steady, despite the prevailing economic uncertainty and rising interest rate environment.
• With more buyers than sellers continuing to prevail, and with countries in Asia that were previously constrained by
  COVID travel restrictions likely to open gradually in 2023, prices of prime high-rise homes should continue to increase albeit at a more moderate pace.

Landed Residential

• Due to scarcity in high-rise Singapore, prices of landed homes continued to rise only held back by sellers’ reluctance to place their homes on the market, a situation similar to prime non-landed homes. Based on flash estimates released by URA, the Property Price Index (PPI) for landed homes rose a further 0.5% q-o-q in Q4 2022**, bringing the total increase to 9.5%** for the year.
• Within the landed housing market, the average land prices of Good Class Bungalows (GCB) continued to increase, gaining 27.1% to S$2,108 psf in H2 2022 from the S$1,658 psf in H1 2022 and 25.3% y-o-y. However, transaction volume shrank three times from the 60 in 2021 to 20 in 2022. Due to the substantial price quantum characteristic
  of such rarefied luxury homes, the high volume recorded in 2021 cannot realistically be duplicated over consecutive years.
• With many landed homeowners holding back, transaction activity is likely to remain subdued in the first half of 2023. Additionally, the increasingly uncertain economic outlook might also shift some buyers to the side-lines.
• As such, while the increase in prices in the landed residential market was 9.5% for the whole of 2022**, price growth in 2023 is expected to be more modest.