Huttons’ Comments on URA 3Q 2023’s Flash Estimates

2 October 2023

The property market is shifting into a stable and sustainable mode after being in high octane drive over the past two years. Prices were resilient, edging up 0.5% in 3Q 2023 despite the economic headwinds. In the first nine months of 2023, private property prices were up by 0.5%. Private property prices are 26.4% higher than the last peak in 3Q 2013.

There are several reasons behind the shift. First is the uncertain economic outlook which is also tempering the growth in employment and wages. Second will be the continued high interest rate paid on alternative investments like T-bills, bonds and fixed deposits which are competing with property investments. Third will be the higher for longer interest rate which is pricing out price sensitive buyers and limiting the price gains. Lastly will be the number of units launched for sale in the first nine months of 2023 which is more than 50% higher compared to a year ago. Buyers are therefore taking slightly longer to make a decision.

Based on caveats, developers are estimated to have sold around 2,000 units in 3Q 2023 which is on par with 2Q 2023. Huttons estimate developer sales to be between 5,200 and 5,500 units in the first nine months of 2023. The robust sales came on the back of almost 3,000 units launched for sale in 3Q 2023. There were 9 private residential project launches in 3Q 2023 – Grand Dunman, Lentor Hills Residences, Orchard Sophia, Pinetree Hill, The Arden, The Lakegarden Residences, The Myst, The Shorefront and TMW Maxwell.

The resale market bore the brunt of the higher for longer interest rate in 3Q 2023. Transaction volume in 3Q 2023 is estimated to be more than 20% lower than the previous quarter as price sensitive buyers are priced out. The higher interest rate is also limiting price gains in the resale market.

The cooling measures on 27 April 2023 had a greater impact on the Core Central Region (CCR) as the proportion of foreigners buying residential properties tends to be higher. Sales in the CCR plunged by around 30% in 3Q 2023 compared to the previous quarter. Prices have also dropped by 2.6% in 3Q 2023.

After the cooling measures, the proportion of foreigners purchasing residential properties in Singapore in 3Q 2023 more than halved to 1.9% compared to 4.1% a quarter ago. In 3Q 2023, US citizens are the number one purchasers of residential properties in Singapore. Singaporeans and PRs made up a larger portion in 3Q 2023 as more buyers wait for either their PR or citizenship before buying a property in Singapore.

J’den, Mattar Residences and Watten House are estimated to be launched for sale in 4Q 2023. Developer sales could end the year between 6,500 and 7,500 units. Prices of new homes are likely to increase up to 5% in 2023 on the back of imported inflation and resilient demand.