Delayed rate cuts stall significant recovery in the private residential market

Experts project a full-year sales volume of 5,000 to 6,200 units.

A significant recovery in the private residential market is unlikely in 2024, with more substantial shifts expected in 2025.

According to CBRE, the delay in interest rate cuts, along with sustained economic uncertainty, is hindering recovery in the market. This delay is also expected to slow the growth of private residential prices.

However, once interest rates are adjusted, Knight Frank said it could provide a "psychological stimulus," potentially swaying undecided homebuyers towards making a purchase. 

Elevated interest rates, economic uncertainty, high private home prices, and cooling measures, have been holding back homebuyers, said Knight Frank.

JLL shared a similar sentiment: "Amidst elevated interest rates and high private home prices, homebuyers have remained selective and cautious, which has moderated the pace of price increases."

CBRE also observed that buyers have been resistant to high price points, particularly at recent new launches. 

"As a result, the lower take-up rates seen across 2024 project launches seem to encourage developers to delay their launches in anticipation of better and more stable market conditions," CBRE said.

PropNex added that some buyers may be motivated to act if they find properties with the right pricing, good location, efficient unit layout, a compelling urban transformation story, and a strong developer track record. 

"We expect realistic pricing to drive primary market sales, with quantum play remaining a key pricing strategy for developers to achieve a good take-up rate at project launches," PropNex added.

For 2024, Huttons expects developers to sell up to 5,500 new homes, with prices increasing by up to 4%. On the other hand, OrangeTee projects 5,000 to 6,200 units sold and a price increase of 1%-3% in 2024.