According to flash estimates released by the Urban Redevelopment Authority (URA), private home prices in Singapore have recorded a decline for the first time in three years. In the second quarter of 2023, prices fell by 0.4 percent, indicating a slowdown in price momentum across all market segments. These figures come in the wake of several rounds of property cooling measures implemented by the government. This article delves into the details of the price decline, potential factors contributing to it, and the outlook for Singapore’s property market.
Price Decline and Cooling Measures
The flash estimates reveal a 0.4 percent quarter-on-quarter decrease in private home prices during the second quarter of 2023. This decline follows a 3.3 percent gain in the previous quarter. The introduction of property cooling measures since December 2021, including the recent increase in additional buyer’s stamp duty (ABSD) implemented in April, may have contributed to the dampening of price growth. The government remains vigilant, monitoring the property market closely and ready to adjust policies as necessary, as stated by Minister for National Development Desmond Lee.
Possible Factors and Expert Analysis
Industry experts suggest that developers may have priced their launches more sensitively with affordability in mind, responding to the cooling measures. Mark Yip, CEO of Huttons Asia, believes that this pricing strategy, along with fewer high-profile deals above S$10 million, has influenced the surprise decline in property prices. Christine Sun, Senior Vice President of Research and Analytics at OrangeTee & Tie, highlights that price growth has slowed due to the impact of the cooling measures on borrowing ability, increased borrowing costs, and elevated interest rates affecting buyers’ affordability.
Segment Analysis
Non-landed property prices experienced a decline of 0.5 percent in the second quarter, with the Rest of Central Region (RCR) being the primary driver of the decrease. Prices in the RCR fell by 2.6 percent, contrasting with a 4.4 percent increase in the previous quarter. The Core Central Region (CCR) and Outside Central Region (OCR) witnessed moderated price increases of 0.3 percent and 1.2 percent, respectively. Landed properties, on the other hand, saw their smallest gain in two years, with prices increasing by only 0.1 percent.
Market Outlook
Despite the price decline, industry experts foresee buying activities continuing in the second half of the year, with more project launches scheduled. The lunar seventh month may see developers bringing forward their launches, potentially boosting new home sales. It is anticipated that the market may sell around 8,000 units with prices increasing up to 5 percent in 2023. However, the higher interest rate may restrict transaction volume to an estimated 12,000 units. The full effects of the cooling measures are expected to become more evident in the coming months.
Conclusion
The decline in private home prices in Singapore, the first in three years, suggests a cooling effect on the property market due to the implementation of government cooling measures. The moderation in price growth, particularly in the non-landed property segment, can be attributed to factors such as affordability considerations and increased borrowing costs. The market outlook remains cautiously optimistic, with expectations of continued buying activity and new project launches. As the real estate statistics for the second quarter of 2023 are released, a comprehensive analysis will provide deeper insights into the evolving dynamics of Singapore’s property market.
