_URA Real Estate Stats - Q4 2023
URA Private Residential Flash Estimates
Overall price growth in the private residential market continued to ease, as the URA All Residential Price Index increased 2.7% q-o-q and an increase of 6.7% for the whole of 2023, lower than the yearly increase of 8.6% in 2022.
The private home market will continue on the path towards stability as demand moderates and supply catches up, with balance expected to be achieved sometime in 2024. The incoming supply of about 10,000 private homes in the year ahead would lead to more moderate price growth.
Nevertheless, private home prices in the new launch market are expected to remain elevated due to committed land and construction costs. This was mainly the reason for the price increases of 4.2% q-o-q in the Core Central Region (CCR) in Q4 2023 contributed by the launch and sales of Watten House, translating to an annual rise of 2.1% for 2023. This was also observed in the Outside Central Region (OCR) where non-landed home prices rose 4.6% quarterly in Q4 2023 due to the brisk sales of J’den in Jurong East upon launch in November, resulting in 13.8% price growth for the whole year.
This dynamic might result in two-tier pricing with the gap between the primary and secondary market widening in 2024.
Given the combination of the above factors, private home prices are projected to grow by a more moderate 3% to 5% in 2024, against the 6.7% (flash estimates) increase in 2023.
Landed home prices grew 4.5% q-o-q during Q4 2023 after having decreased 3.6% q-o-q in Q3 2023. This translated to an increase of 7.8% for the whole of 2023. Potential homebuyers continue to remain on the lookout for landed homes due to lifestyle preferences for larger indoor and outdoor spaces. Evergreen demand for freehold landed homes will be supported in 2024 by the aspirations of Singaporeans, with homebuyers willing to move out of locations that are familiar to them in search of such properties. However, the main obstacle to deals being successfully concluded will be the limited inventory of saleable stock.
General demand for private homes in the months ahead will remain underpinned mostly by homebuyers purchasing for their own occupation, even as these buyers take a longer time to consider in light of factors such as cooling measures, sticky high interest rates, job security, inflationary and recessionary pressures.
Although household balance sheets are healthy, homebuyers have been and will continue to be circumspect in their housing decisions, targeting locational and product attributes that best fit their lifestyle and family requirements, such as schools.
Residential investors purchasing for capital preservation, appreciation, and recurring income, both locals and foreigners, will likely remain on the sidelines until interest rates peak, stabilise and perhaps reduce, and until there is more clarity in the economic outlook. Nonetheless, history has shown that experienced investors familiar with Singapore’s private residential scene are quick to react when windows of subdued activity turn with the return of transactional activity.
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