Why Singapore's condo resale prices surge amidst price gap

Renewed project launches and increased suburban launches were attributed as the main drivers of the faster price growth.

The Singapore property market continues to witness a surge in resale property prices, driven by a widening price gap between new and resale units, as observed by industry experts.

In March 2024, the condo resale market saw its most robust sales in seven months, with approximately 883 units sold, a 17% increase from the 752 units sold in February, as per the recent SRX-99co report. However, compared to March 2023, resale volume decreased by nearly 23%, with 1,144 units sold that year. At least 48.2% of resold units were from the Outside Central Region (OCR), 31.6% from the Rest of Central Region (RCR), and 20.2% from the Core Central Region (CCR).

According to OrangeTee, the faster price growth is predominantly due to increased suburban launches in the previous months, with most new homes now selling above $2,000 per square foot.

This surge has resulted in a significant price disparity between new and resale units, leading many sellers to adjust their asking prices upwards, it noted.

"As new home sale prices are likely to hold steady, the resale prices of condos may continue to trend higher or hold steady in the upcoming months," OrangeTee said. 

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Following the Chinese New Year celebrations, there was also a resurgence observed in resale volume as buyers re-entered the market, signalling positive market sentiment and resilient demand for resale condos.

Likewise, Mark Yip, CEO of Huttons Asia, also attributed the recent price growth to renewed project launches in March, influencing the resale market. 

He noted some condo owners may have bought new properties to avoid additional buyer's stamp duty (ABSD) on their second home, whilst others opted for resale condos. 

Moreover, foreign buyer activity increased, likely due to heightened viewings during Chinese New Year leading to March purchases. 

“Price growth was measured as many buyers were restrained by the high interest rates,” he said.

Yip also predicts the resale condo market to remain active, with prices possibly rising by 4% to 6% in 2024, down from a 7.3% increase in 2023.

Wong Siew Ying, head of research and content at PropNex, also noted a slower growth in private home prices and increased market activity post-seasonal lull, suggesting more buyers may be returning to the market. 

“That said, the mismatch in pricing expectations between buyers and sellers could potentially put a drag on transactions,” he said.

Ying added many sellers are reluctant to reduce their asking prices due to high replacement home costs. 

Since the stricter ABSD measures in April 2023, foreign demand for resale homes has decreased significantly and is expected to remain low due to the steep 60% ABSD rate.