Homebuyers more selective on buffet of new private homes in SG

Sales may pick up in H2, as borrowing conditions ease thanks to declining interest rates.

More new units are launching in the Singapore market than the past two years, leading to slower price increases for non-landed private homes– and a more selective buyer base, reports Knight Frank.

The prices of non-landed private homes in Singapore eased to a 6.5% rise in 2023, slowing from the 9.9% and 8.1% price incersaes in 2021 and 2022, according to data from the Urban Redevelopment Authority (URA).

Nicholas Keong: “Homebuyers have more choices now than they did in the property boom during the pandemic, and the variety of options have led to longer decision-making before purchase,” said Nichols Keong, head, residential and private office, Knight Frank.

More new units were completed returning balance to the undersupplied market of the last two years.

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Lower transaction volumes
“The muted sentiment since Q3 2023 continued to prevail in the residential market as sale transactions for non-landed private homes dropped 25% to 3,622 in Q4,” Keong added.

He did note, however, that the lower transaction volume was “expected” due to the holiday period.

Many developers also hold off new launches in the last month of the year, he added.

For 2023, total transaction volume was 17,389, with new sales volumes dropping 43.2% in Q4 to just 1,086 units sold. 

Sales of the secondary market also declined 13% in Q4 compared to the quarter before to just 2,536 transactions.

Demand may rise in H2 2024
That does not mean that demand is not there. It is possible that home buyers have momentarily fled to the sidelines until interest rates fall, Keong noted.

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“With interest rates expected to fall only from the second half of 2024, some homebuyers are adopting a watch-and-wait posture until more certainty prevails in the borrowing rate environment,” Keong said.

“With interest rates expected to tamper down sometime in 2024, this could perhaps be the catalyst that will inject fresh activity in the market, spurring homebuyers to step out from the sidelines,” he added.

With the number of upcoming launches, homebuyers will likely seek quality over price, tempering price growth to between 3% to 5% in 2024. 

Keong and Knight Frank expect between 15,000 to 18,000 non-landed private home sales to be sold this year.