_Knight Frank Commentary (URA Flash Estimates Q4 2024)

URA Private Residential Flash Estimates

The burst of homebuyer activity in November with six new launches and the near sell out of Emerald of Katong, overturned the price correction of -0.7% q-o-q in Q3 2024. Overall price growth in the private residential market quickly rebounded in Q4 2024 as the URA All Residential Price Index increased 2.3% q-o-q and 3.9% for the whole of 2024, based on the flash estimates announced by URA today.

As interest rates started to fall with the US Federal Reserve announcing a 50-basis point cut in September 2024 followed by 25-basis point reductions in November and December, homebuyer activity in the new sales market swelled significantly in October and November 2024. Pent-up demand accumulated during the course of a year that was characterised by fewer new launches, elevated interest rates, economic uncertainty and geo-political tensions. Despite this, homebuyers decided to get off the fence and plunge back into the new sale market before the close of the year, ending 2024 with a big bang.

In the Core Central Region (CCR), prices grew 2.4% q-o-q and 4.3% y-o-y even though demand was muted throughout much of the year, hamstrung by the 60% Additional Buyer’s Stamp Duty (ABSD) rate for foreigners. Even though the prime market in the CCR traditionally attracts wealthy foreign families parking their funds in a safe and stable geography, high-net-worth Singaporeans and new citizens have been selectively acquiring some of these luxury properties. Additionally, the launch and sales of some 62 units at The Collective at One Sophia (based on November developer sales data from URA) with a reported median price of S$2,732 psf contributed to the increase in Q4 2024 after two quarters of successive declines in Q2 and Q3.  

In the Rest of Central Region (RCR), prices increased 3.4% q-o-q and 6.2% for the whole of 2024, the highest among the three regions. This was due to the near sell out of Emerald of Katong, and as a result also created a buzz of activity among other projects in the vicinity such as The Continuum, Tembusu Grand and Grand Dunman, which sold a total of 203 units among these three projects in November.

Norwood Grand in Woodlands and Chuan Park in Serangoon headlined the Outside Central Region (OCR) in Q4 2024, with both projects selling above 70% during their respective launches. With healthy take-up rates from the above two prominent launches in the OCR, non-landed home prices grew by 3.4% q-o-q. However, on a yearly basis, prices increased 3.8% in the OCR in 2024, a stark difference from the 13.7% annual increase in 2023, indicating that prices have stabilised to a balanced level in the suburban market.

In the landed market, landed home prices decreased by a marginal 0.9% q-o-q in Q4 2024 to end the year flat with a mere 0.1% gain. Nevertheless, demand for landed houses remained stable throughout 2024 as housing aspirations for these homes at the top of the Singapore housing pyramid remained firm against the generally limited inventory.

An overall annual increase of 3.9% in 2024 can be considered moderate after recent yearly gains of 6.8% in 2023, 8.6% in 2022 and 10.6% in 2021. In contrast, in the public housing market, the HDB Resale Index increased 9.6% in 2024 (based on HDB flash estimates). The question now is whether the private home demand witnessed in Q4 2024 will resume in the new year after the Christmas and Chinese New Year festive period is over. The burst of homebuyer activity in Q4 is likely to ease to less frantic levels and pace of take up over the next the few quarters.

However, interest rates are not expected to fall as much as earlier anticipated given a second Trump presidency, and the world is likely to become more volatile in 2025 before clarity emerges from the clouds of uncertainty. Geo-political tensions are not going away and have arguably increased as the year draws to a close, especially with greater uncertainty in the Middle-East and Ukraine.  

Despite the unfolding uncertainty, household net worth in Singapore that remains on a steady path of improving affluence, a low unemployment rate, and wealth that is passed down from earlier generations of Singaporeans that have benefitted from asset appreciation will support take-up in the primary market. As such, prices are likely to grow between 3% and 5% in 2025, similar to 2024. Growth will be supported by moderate-to-healthy take-up rates of new launches in the year ahead. Demand for landed homes were supported in 2024 and over the medium- to long-term will be supported for the same reasons.

Additionally, the globally mobile wealthy putting down roots in Singapore for its stability in an increasingly uncertain world will also provide base demand for landed homes. Perennial interest in landed homes against saleable inventory from retirees downgrading to homes that are easier to maintain, will provide the foundation for demand with landed prices expected to moderately increase around 3% in 2025.