Condo prices on track for ‘stabilisation’ as cooling measures hit

Prices of ‘prime’ private homes are likely to remain flat at -1% and 2%

Private home prices rose by 1.1% in Q2, easing from the 1.4% price increase in Q1, according to flash estimates from the Urban Redevelopment Authority (URA).

As a result, the total increase of prices was just 2.5% in H1 compared to the first six months of 2023.

Analysts believe that prices in the private residential market will continue to stabilise throughout 2024.

“The private home market will continue on the path towards stability and will likely plateau in certain market segments in the remaining half of 2024 with demand continuing to be selective and measured, especially with options from upcoming launches,” says Leonard Tay, head, research, Knight Frank Singapore.

Huttons Asia’s Lee Sze Teck was of the same mind. “Prices in the property market moved into a stabilisation phase in Q2,” Lee said in a separate report.

Tay expects that the prices for newly launched private homes will remain elevated due to land costs that were committed 12 to 18 months ago, as well as prevailing high construction costs. 

“This contributed to prices in the Rest of Central Region (RCR) growing by 2.2% quarter-on-quarter (QoQ) and in the Outside Central Region (OCR) by a more marginal 0.3% (QoQ) in Q2,” Tay said.

Lee, meanwhile, said that there might be some hesitation from the buyers’ side as well.

“Buyers were also more cautious in view of the muted economic and employment conditions. The higher for longer interest rates also led to more moderate price gains. Some budget sensitive buyers have chosen to sit on the fence,” Lee said.

Prices flatline from lack of foreign demand
Cooling measures may also have begun to work, deterring foreign buyers from purchasing private homes, according to Tay.

“Prime non-landed home prices are likely to have started to flatline with pressure on sellers to lower expectations, given the lack of demand from foreign buyers due to the doubling of the Additional Buyer’s Stamp Duty rate to 60% from end-April 2023,” Tay said.

Singaporean home buyers scouting out prospects in the prime areas have also become more selective in the search for an ideal home for themselves, Tay observed.

“With the current limited demand in the high-end market segment, prime prices are likely to remain flat between -1% and 2% for the whole year as sellers that are under pressure to sell in the resale market could adjust expectations down to prevailing market levels,” he said. 

Overall, Tay expects private home prices to grow by 3% to 5% in 2024, as Knight Frank had earlier projected. This is lower than the 6.8% annual increase in 2023.