Private
The private residential property market posted a surprise decline of 0.4% in prices after the cooling measures on Apr 27. This could be due to developers pricing their launches sensitively with affordability in mind after the cooling measures. There were slightly lesser high profile deals above $10 million after the cooling measures.
Nevertheless market demand remains healthy as there is ample liquidity. Based on caveats, developers are estimated to have sold more than 2,000 units in 2Q 2023, almost 66% higher than 1Q 2023’s sales. This brings the sales in 1H 2023 to more than 3,000 units.
The strong sales came on the back of more units launched for sale in 2Q 2023. An estimated 2,300 to 2,400 units from 5 project launches were launched for sale. 4 of the 5 projects were launched after the cooling measures.
Tembusu Grand, which was launched before the cooling measures, achieved a strong first day sales above 50% or 340 units out of 638 units. The first launch after the cooling measures, Blossoms by the Park got off to a roaring start selling more than 200 units out of 275. In May, The Continuum sold 216 units on the first day. The only integrated transport hub project in Bukit Timah, The Reserve Residences sold 520 units on its May launch weekend, making it the highest first-weekend sales since Normanton Park in Jan 2021. Lavender Residence, a boutique 17-unit project is estimated to have sold 8 units in June.
Following the cooling measures, the number of purchases by foreigners have reduced significantly in June. Based on caveats, there are 21 purchases by foreigners which translate to 2.9% of total non-landed transactions. This is a significant drop compared to 112 in April 2023 and 69 in May 2023. Of the 21 purchases by foreigners in June, 8 are from the US, 1 from Norway, 11 are unspecified while 1 is from the UK which will attract a ABSD of 60%.
The number of purchases by PRs increased to 17.1% in June compared to 14.3% in April and 15.6% in May. One observation which stands out in June is that all purchases by the Chinese are by Permanent Residents in Singapore. Moving forward, the proportion of purchases by foreigners may be between 1% and 2% while that by PRs may increase to as high as 20%.
The luxury home segment is likely to bear the brunt of the cooling measures in the interim. There may be less transactions of $10 million and above by foreigners moving forward. This may pick up in the long run if some of the foreigners decide to apply to become a PR in Singapore.
The resale condo market is seeing slower activities in 2Q 2023 as some buyers stayed out because of the high interest rate. Nevertheless it should continue to see healthy demand from HDB upgraders and those who want to move in fast. The higher interest rate may put a cap on transaction volume to an estimated 12,000 units in 2023.
It may take a few more months before the full effects of the cooling measures can be observed. Developers are planning more launches in July to avoid the lunar seventh month and that may boost transaction volume. Upcoming launches in July include Altura (EC), Grand Dunman, Lentor Hills Residences, Orchard Sophia, Pinetree Hill, The Lakegarden Residences and The Myst. Prices are likely to remain stable as launches are priced sensitively with affordability in mind. With more launches in the pipeline, the market is on track to sell around 8,000 units with prices increasing up to 5% in 2023.
HDB
Prices of resale flats increased by 1.4%, faster than the 1% growth seen in 1Q 2023 probably aided by the doubling in grants given to buyers. Nevertheless it is still lower than the quarterly average in 2022.
Hence there were only 7 HDB towns which saw a decline in prices in 2Q 2023 compared to the previous quarter where 13 towns had price declines. Ang Mo Kio, Bukit Timah and Marine Parade towns saw two quarters of price declines.
Transaction volume was estimated to be 6,409 flats in 2Q 2023, 8.2% lower than 1Q 2023 and 4.6% lower year-on-year. While the grants gave buyers a boost in their housing budget, there is still a price mismatch between sellers and buyers leading to lower transaction volume. Some buyers were lured to the BTO market as the HDB increased the supply of flats with shorter waiting time.
Based on data.gov.sg, there were an estimated 90 million-dollar flat transactions in 2Q 2023, 12.6% lower than the previous quarter of 103 million-dollar flats. This made up an estimated 1.5% of total transaction volume in 2Q 2023. While a record of $1.5 million was set for an adjoined flat at Moh Guan Terrace, there appeared to be a reluctance among buyers to pay $1.1 million and more for a HDB flat. More million dollar flat transactions are in the range of $1 million to $1.1 million in 2Q 2023. Buyers may be rationalising paying a high price for a HDB flat and more have opted for 4-room flats with the proportion hitting a high of 32.2% in 2Q 2023 compared to 20.4% in 1Q 2023. These four room flats tend to be younger with an average age of 11.3 years compared to 18.3 years for 5-room flats and 31.7 years for executive flats.
With more BTO flats completing in the coming months, there may be more supply of resale flats for sale as owners making a lateral move to a BTO flat will need to sell off their current flat. The increase in the number of private residential launches may see more HDB upgraders opting to sell their flats first so that they do not need to pay the 20% ABSD upfront.
HDB will launch around 13,000 BTO flats in Aug and Nov 2023. Some of these flats may have shorter waiting time and may attract some buyers away from the resale market.
This increase in both BTO and resale flat supply may moderate prices in HDB resale flats to not more than 5% in 2023. HDB resale flat transactions are estimated to be in the range of 24,000 to 26,000 in 2023.