Huttons’ comments on URA and HDB 4Q 2022’s flash estimates

3 April 2023


Prices in the private residential market rose by 3.2% in 1Q 2023 as more property launches were pushed out and buyers returned to the market after the seasonal lull in the last quarter of 2022. The marginal increase in property tax in Feb 2023 did not have an impact on market demand as buyers chased after attractively priced homes in the market.
Price gains in the Rest of Central Region (RCR) outperformed other regions in Singapore, rising by 4.0% in 1Q 2023 probably due to good sales at Terra Hill which has a median selling price of $2,699 psf.
The two launches in the Outside Central Region (OCR), Sceneca Residence and The Botany at Dairy Farm, booked good sales on launch day as well. Prices in the OCR increased by 1.9% as upgraders continued to underpin demand in the OCR.
Foreigners returned to the local residential property market in 1Q 2023. Based on caveats as of 31 Mar 2023, they picked up an estimated 127 out of 1,403 new project units. The top five projects favoured by foreigners in 1Q 2023 are Riviere (21 units), Klimt Cairnhill (20 units), Perfect Ten (10 units), Leedon Green (7 units), Pullman Residences Newton (7 units) and The Botany at Dairy Farm (5 units).
The relaxation of border controls by China in Jan 2023 saw the return of Chinese buyers to Singapore’s property market. Many luxury units in the Core Central Region (CCR) were snapped up by them in Jan and Feb.
As more higher priced luxury homes were sold in 1Q 2023, prices of residential homes in the CCR increased by 1.0%, picking up pace from the earlier quarter.
The high interest rate is unlikely to affect new home sales as the drawdown on loan is on a progressive basis. The new homes market may see sales around 9,000 units on the back of more launches.
The collapse of SVB and Signature Bank appeared to be idiosyncratic and unlikely to spread. The smaller rate increase of 25 basis points by the US FED may mean a smaller increase in borrowing costs and may help the resale condo market.
The resale condo market will continue to see HDB upgraders who are riding on the steady HDB market. The higher interest rate may put a cap on transaction volume to an estimated 12,000 units in 2023.
Huttons adjust our price expectations for 2023 by up to 8% from an earlier estimate of up to 5% on the back of stronger price gains in 1Q 2023.
HDB resale prices continued to moderate in 1Q 2023 to 0.9% as price resistance sets in. This is the slowest quarterly price growth since 2Q 2020 where prices edged up by 0.3%.
Based on data downloaded on 31 Mar 2023, the number of HDB towns which have quarterly price declines has increased. There were 3 HDB towns which saw a decline in quarterly prices in 2Q 2022. This increased to 7 HDB towns in 3Q 2022, 10 in 4Q 2022 and 12 in 1Q 2023. The HDB towns which had seen two quarters of price declines were Bukit Panjang, Kallang/Whampoa and Tampines.
In 1Q 2023, resale volume is likely to be similar to the previous quarter at 6,600 flats. The Chinese New Year period resulted in lesser viewings and lower transactions. Quite a number of sellers, especially those newly MOP flats and flats in mature estates have increased their asking prices after the Government announced an increase in housing grants on Feb 14. While there were more viewings after the announcement, most buyers however are not willing to pay COV as they find HDB resale prices to be high.
However the cooling measures on private property owners did not appear to have reduced the number of million dollar flat transactions. Based on caveats downloaded on 31 Mar, there were 101 such transactions which make up an estimated 1.5% of total transaction volume in 1Q 2023. The number of million dollar flat transactions is 9.8% higher than 4Q 2022 and 21.6% higher than a year ago. However the 15-month time bar may have resulted in a shift in buying demand to smaller flats. In 3Q 2022, 5.4% of million dollar flat transactions were 4-room and smaller flats. After the cooling measure, this increased to 14.1% in 4Q 2022 and further went up to 21.8% in 1Q 2023. Other possible reasons for the shift in demand could be buyers adjusting their budget in view of economic uncertainties and higher interest rates.
The HDB resale market is likely to trend towards stabilisation and see not more than 5% increase in 2023. HDB resale flat transactions are estimated to be in the range of 24,000 to 26,000 in 2023.
HDB will launch up to 11,600 BTO flats for sale in the next two BTO launches in May and Aug 2023. Some of these flats may have shorter waiting time and may attract some buyers away from the resale market. The higher interest rate in 2023 may also deter buyers from the resale market and see them applying for a BTO flat.