Private residential market to hit an all-time low in 2024: Knight Frank

US Fed rate cut unlikely to impact market until next year.

The US Federal Reserve rate cut in September could motivate buyers in the private residential market, but analysts say the impact may not be felt immediately and could only be felt from 2025 onwards.

According to Knight Frank, non-landed home transactions in the Core Central Region (CCR) remained lacklustre, with 526 in Q3, representing a 27.5% quarter-on-quarter (QoQ) decline.

In the same period, new sale transactions also dropped 39.8% QoQ to 53 units, marking the sixth consecutive quarter of decline. Meanwhile, secondary sales declined 25.9% QoQ to 473 units. This poor transaction volume led to home prices to fall 1.5% QoQ.

Knight Frank said the decline was due to fewer new projects in the region, but the doubling of the Additional Buyer’s Stamp Duty (ABSD) for foreign buyers from April 2023 created a key roadblock.

In the Rest of Central Region (RCR), prices of non-landed homes rose 0.2% QoQ and 1.3% year-on-year (YoY).

On the flip side, while new sales increased in the RCR, total transaction volume fell 10.1% QoQ to 1,252 units, largely due to a 20.9% decline in secondary sales to 919 units.

“With the number of new sales likely to be about 4,000 units, 2024 could have the poorest showing since 2008 (4,264 new sales) during the Global Financial Crisis. It is now probable that private home prices will likely end the year gravitating towards the lower end of Knight Frank’s 3% to 5% projection, with growth due to the prices at new launches that are a function of land costs committed some 12 to 18 months ago and high construction costs,”  Nicholas Keong, Head of Residential and Private Office at Knight Frank said.