Why Singapore home buyers will be more discerning in 2024

Sales volume dropped 8.5% QoQ as prices continued to climb.

Higher prices and locations that are near amenities like transportation hubs and schools will make home buyers more discerning in 2024.

New private residential sales volume declined 8.5% QoQ Q3 2023 to 1,946 units, following two consecutive increases despite the increase in launched units in Q3, a report by Savills revealed.

Alan Cheong, Executive Director, Research & Consultancy at Savills Singapore said this could be due to buyers’ selectivity to the high interest rate environment which might have caused them to choose their project with greater scrutiny. 

Savills reported that 49.7% of the new sales came from the Rest of Central Region (RCR). However, as there were fewer units launched on a QoQ basis in the market segment, this was a 38.5% quarterly decrease from the 1,573 units in the previous quarter.

Notwithstanding more units being launched in the Core Central Region (CCR), new sales in that market segment fell 43.1% QoQ to 253 units. The CCR had appeared to be affected by the recalibration of the cooling measures and the increased scrutiny evident from the billion-dollar money laundering cases. On the other hand, new sales in Outside Central Region (OCR) surged from 109 units in Q2 2023 to 725 units in Q3 2023, the highest since Q3 2022, when suburban new sales amounted to 1,244 units. Nevertheless, on a YoY basis, this was still a decline of 41.7%.

Meanwhile, Secondary sales also decreased, albeit at a sedated pace of 0.2% to 3,255 units. On a YoY basis, secondary sales continued to trend downwards by a smaller 17.8%, as compared to the 26.1% in the previous quarter. In the third quarter, secondary sales in both the CCR and RCR fell by 2.7% and 7.5% QoQ to 535 units and 963 units respectively. For the OCR, secondary sales continued to increase for the second consecutive quarter by 5.2% QoQ to 1,757 units.

According to Cheong, next year, the market will be more discerning, gravitating towards projects with a few key attributes namely being the first major launch in a sub-zone after a five-year or longer period, located to public transportation nodes, proximity to schools or other amenities, and executive condominiums

“We believe that for 2024, the market tapestry will be one that weaves out a consolidative pattern. The sharp run-up in land prices from 2020 to 2022, pushed selling prices well past the $2,000 per sq ft resistance level for both the RCR and OCR. When these projects were marketed in 2022, the new pricing regime was accepted because, during the peak of the pandemic measures in 2020 and 2021, the market was starved of new launches. Revenge buying manifested itself in 2022 and the momentum followed through to Q1 and, for some projects, into Q2/2023. However, whilst prices could continue to rise, the air is getting thinner. We saw this from the second quarter of 2023 when some projects mustered sales of less than 30% on the first weekend of launch,” Cheong said.

Meanwhile, next year, buyers may find residential properties less appealing if they are in an area saturated with previous launches over the past few years, have no unique selling features like not being near popular schools and transportation hubs. 

Savills maintains its 7% YoY price increase for 2023 as a whole.