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Leonard Tay July 03, 2023

The URA All Residential Price Index declined 0.4% quarter-on-quarter (q-o-q) based on Q2 2023 flash estimates released today, after 12 consecutive quarters of price gains after Q1 2020. On a yearly basis, the price index rose 7.2%, and an estimated 2.9% in the first six months of 2023. The drop in the quarter was due to the URA non-landed price index falling 0.5% q-o-q in Q2 2023 flash estimates. It appears that the latest round of cooling measures announced on 26 April 2023 combined with rising interest rates that limited affordability, may have reined in price growth as homebuyers purchasing for investment become price resistant and adopt a wait-and-see attitude from the sidelines before deciding on their next move. The measures also acutely affected foreign homebuyers with the doubling of Additional Buyer’s Stamp Duty (ABSD) rates from 30% to 60%. This is reminiscent when cooling measures were announced in July 2018 causing subsequent private home price decline of 0.1% q-o-q in Q4 2018 and 0.7% q-o-q in Q1 2019. Nevertheless, despite the cooling measures, sales transaction volume rose to an estimated 4,762 sales in Q2 2023 (up to mid-June), as compared to the 4,121 in Q1 2023 as Singaporean and Permanent Resident homebuyers bought homes for their own stay.

Among the market segments in the non-landed residential market, the Outside Central Region (OCR) rose the highest at 1.2% q-o-q, followed by the Core Central Region (CCR) at 0.3% q-o-q. In contrast, the Rest of Central Region (RCR) exhibited a 2.6% q-o-q drop in Q2 2023. The fall in prices in the RCR is a bit surprising, especially with four high profile projects selling a significant amount of units upon the first weekend of launch. These included Blossoms By The Park (73% sales out of 275 units), Tembusu Grand (53% sales out of 638 units), The Continuum (26% sales out of 816 units) and The Reserve Residences (71% sales out of 732 units). Perhaps this was due to the freehold Terra Hill being the major launch in the RCR in Q1 2023 set an average selling price of over S$2,650 psf, while the combination of three 99-year leasehold launches in Q2 2023 (Blossoms By The Park, Tembusu Grand and The Reserve Residences) had slightly lower average selling prices of around S$2,423 psf to S$2,465 psf at launch.

According to flash estimates, the price index for all private landed properties grew marginally by 0.1% q-o-q and 8.3% y-o-y in Q2 2023, easing from the 5.9% q-o-q and 11.4% y-o-y gain in Q1 2023. Even though landed home prices eased in Q2 2023, this asset class nevertheless increased by 6.0% in the first half of 2023. Landed home sales continued to move despite economic volatility as wealthy individuals remained drawn to the exclusivity of such homes in Singapore. During the quarter, some of the high profile landed home transactions that appeared in the headlines included the Fangiono Family purchasing four bungalows in the Nassim Road Good Class Bungalow (GCB) area, characterising the ongoing demand for landed supply in high-rise Singapore.

Even though private home price growth in Q2 2023 took a breather, and could expect to do so in the quarter ahead as prevailing uncertainty, global disruptions and the chance of a technical recession looms in the minds of homebuyers, the increase in transaction volume in Q2 2023 due to a series of new launches suggests that demand remains underpinned by homebuyers purchasing for their own occupation. With private home prices increasing by 2.9% (flash estimates) in the first six months of 2023, this is on track to fall within Knight Frank’s projection of a more subdued 3% to 5% for the whole of 2023, which was less than the original projection of 5% to 7% made at the end of 2022.

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