Private home prices softening due to weak outlook: property analysts

URA showed prices rose at a marginal pace.

Private home prices softened due to a weak macroeconomic outlook, rising mortgage and inflation, OrangeTee said.

It was commenting on the Urban Redevelopment Authority (URA) prices of private homes increased at a marginal pace of 0.4% in the fourth quarter of 2022 from the previous quarter and for the whole of 2022, prices went up 8.6%.

Sales volume also declined in the previous quarter as most buyers were on an overseas vacation and sales activities slowed during the holiday season.

The rental market, rents continued to rise in Q4 2022 amid a shrinking housing stock and rising home prices and there will be a significant ramp-up in housing supply in 2023.

Over 19,291 new private homes, including executive condominiums (EC), slated for completion this year.

Unsold units

The number of unsold units was also low which led to strong sales for new project launches in the Rest of Central Region (RCR) and Outside Central Region (OCR), despite high prices and rising interest rates, Huttons Asia said. 

Developers transacted 7,099 units in 2022, the lowest since 2008, but it was still a strong number considering the low supply launched for sale.

Lowest transactions

One Global Group said new home sales declined to a record low 690 units, a 68.4% decrease from the 2,187 units sold in the third quarter of 2022.

“This was the lowest number of transactions since 4Q2008,” it said. 

The number of units launched in 2022 went down significantly, with only 4,528 units being launched, a 56.9% decrease compared to the 10,496 units launched in 2021. 

Because of the low supply of new OCRs, some qualified home buyers may have turned to ECs as an alternative option due to rising interest rates and the financially viable nature of ECs.