Private housing costs rise 0.4% in the fourth quarter of 2022 despite buyers' and developers' caution - Marina View Residences Condo at Marina View By IOI Properties (Hot Launch 2023)

The prices of private residential properties were up 0.4% q-o-q in 4Q2022. This was slightly better result over what was recorded in the 0.2% q-o-q increase indicated in the flash estimates published by URA on the 3rd of January. However, it’s significantly lower than 3Q2022, which saw a 3.8% q-o-q increase that was reported in the 3Q2022.

In the entire 2022 year the prices of residential private properties increased to 8.6%, moderating from the 10.6% price increase in 2021.

The increase in prices for non-landed goods in the last quarter was driven to sales within the Rest of Central Region (RCR) that recorded an rise of 3.1% q-o-q, maintaining a record-breaking run of 2.8% q-o-q increase in the 2Q2022.

Based on Tricia Song, the head of research Southeast Asia, at CBRE The increase was driven by the high prices on the existing project Riviere and One Pearl Bank and One Pearl Bank, which were included among the 10 top most-sold projects of 2022.

Other projects on the checklist are Lentor Modern located in the Outside Central Region (OCR) with the median price of $2,108 per square foot by 2022. Normanton Park in the RCR that has an average price of $1865 per square feet as well as Amo residence within the OCR with a median cost of $2,110 per square foot.

OCR prices started off from an extremely high foundation and therefore registered an 2.6% q-o-q decline in 4Q2022, compared to the 7.5% q-o-q hike in the preceding quarter. For the entire year 2022, RCR prices increased 9.7% per year, as OCR prices increased 9.3% y-o-y, based upon research by CBRE.

Along with the lack of new launches within the OCR to push price upwards, the rising interest rates and stricter borrowing requirements are also contributing factors according to Nicholas Mak, head of research and consulting of ERA Realty.

“Most of those who purchase OCR homes that are private, including HDB upgraders, are more price-sensitive and have lower cash reserves for purchases of homes. Therefore, the demand for housing in private homes from this particular group of buyers will be significantly affected by the cooling measures in September 2022 measures, which are accompanied by the higher interest rates,” the expert adds.

Market for new launches that are subdued

In terms of volume of transactions in the quarter ended December 31, sales were to a comparatively low 690 units on the new launch market, while 2898 units were sold within the secondary marketplace. In FY2022 the number of new sales, and 14,791 sub-sales and resales.

The figure is 21,890 transactions, which represents the equivalent of a 34.8% decrease compared to the 33,557 units sold 2021. As per Leonard Tay, head of research at Knight Frank Singapore, this wasn’t due to a shortage of demand from home buyers or a lack of inventory that could be sold in the market.

He continues: “The handful of notable launches that took place in the 4Q2022 period, the threat of a global recession as well as the high interest rates has also led to transaction activity slowing toward the year’s end because of the shortage of listings drove buyers to take the wait-and-see approach until they can find more units.”

Developers were cautious and only opened 504 units for sale in 4Q202 according the CBRE Song. The last quarter, the new projects unveiled for the very first time included Kovan Jewel (34 units), Enchante (25 units), Hill House (72 units) as well as Sophia Regency (38 units).

“The take-up rate was generally low at these launches, since home-buying enthusiasm in Q42022 was hurt by the worsening macroeconomic outlook and the high mortgage rate,” she says.

A few home sellers who landed

Prices for homes on the land market increased by 0.6% q-o-q last quarter and brought the total rise for 2022 at 9.6%.

“Prices of homes with a landed lot have continued to increase, but are limited by sellers’ resistance to put their houses for sale,” says Knight Frank’s Tay. “Even even though buyers are willing to pay a decent price to encourage homeowners with land to sell, the majority of them were adamant and some were discouraged due to the lengthy wait time of 15 months for those looking to downgrade their homes and purchase HDB Flats.”

This is a reference to the most recent property cooling measures, which were announced on the 30th of September in the year before, which impacts private property homeowners looking to buy the resale of a four or five-room HDB apartment by setting a wait-out period of 15 months after they have sold their own property. ( Find HDB flats available for lease or to buy with the Singapore HDB directory )

Buffet spread for 2023 releases

While the overall growth that was the property market in 2022 was dampened by a lack of launches the coming year will witness a flurry of new projects that are ready to go on the market. More than 40 projects are scheduled to launch this year.

“The new launches for 2023 should bring some relief from the shortage situation , and will provide buyers with more options of products in an array of places,” says Tay.

But he cautions that the anticipated increase in sales is occurring amid uncertainty in the economy, layoffs of employees in the tech sector and the continued rise in rates of interest, as well as the increasing cost of living.

Yet, fundamentals are continuing to propel the local residential market according to Chia Siew Chuin, the head of research on residential homes, research and consulting in JLL Singapore. “Healthy households’ liquidity and a fairly low unemployment rate as well as the appeal in Singapore as a place to make foreign investors are likely to continue to drive homebuying interest,” she notes.

She says the anticipated return of mainland China is anticipated to boost demand for buying here.

The initial launch of this year which was two-68 unit Sceneca Residence at Tanah Merah Kechil Link, has had a booming sales performance with 60% of its units. “This impressive result will help be a source of confidence in the strength in the marketplace and establish the stage for the new launches to come in the months of February and March” adds Lee Sze Teck the senior director of research for Huttons Asia.