Singapore’s condo market on track to underperform in Q1: analysts

The primary sale market will continue to struggle in 2023.

Singapore’s condo market may have rebounded in February, but the primary sale market will continue to face challenges in the coming months, analysts said.

Mortgage rates and borrowing costs are likely to remain elevated amidst the ongoing banking crisis in the West, noted Christine Sun, senior vice president of research & analytics, Orange Tee & Tie.

Sun expects that there will still be “some demand” for resale condos as the price gap between new and resale units remains wide, pushing some buyers to the secondary market in the search for affordability.

“Big resale units and suburban condos will continue to draw buyers. Further, as a growing number of condos will be obtaining TOP, more units could be put up for resale in the coming months,” Sun said.

ALSO READ: Condo resale prices jump 9.2% YoY in February

Q1 to underperform
Despite a likely increase in buyer interest, the condo resale market is still on track to underperform in Q1, according to Siew Ying Wong, head of research and content, PropNex Realty. 

Only 1,259 condos have been resold in the first two months of 2023, compared to 2,860 in Q1 2022 and 3,730 in Q1 2021, as per past data from 99.co SRX.

“We believe the tightening of lending requirements (4% medium-term interest rate) and the 15-month wait-out period implemented in September, as well as the high interest rates have collectively weighed on resale market activity in recent months, as buyers become more cautious amid uncertainties,” Wong said.

Resale condo price growth is also expected to be muted in the future, despite the marginal rise of 1.4% month-on-month in February.

Buyers are expected to be more prudent due to the elevated interest rates, Wong said.

ALSO READ: Condo resale volumes soar 50.3% MoM in February

“The banking turmoil in the West, tech sector job cuts, geopolitical tensions among major global powers, and concerns over a slowdown in the global economy are other factors that may affect market sentiment,” Wong said.

By end-2023, Huttons Asia CEO Mark Yip said that an estimated 12,000 units are expected to be moved in the resale condo market.