Singapore Property Market Outlook 2024
Increased costs and higher interest rates in 2023 have tempered the overall demand for residential properties. The Additional Buyer Stamp Duty (ABSD) hike in April further dampened demand from investors and foreign buyers, contributing to the moderation of residential demand. Additionally, a series of money laundering cases in August involving high-value residential property transactions has prompted stricter anti-money laundering checks.
However, recent sales performance tells a contrasting story. J’den and Watten House, introduced in November, have not only achieved benchmark prices but also reported outstanding sales. This suggests a positive shift in the residential market, with returning buyers expressing renewed confidence.
Despite the global economic slowdown, Singapore stands out as a beacon of resilience in the Asia Pacific region. The country’s economic growth is anticipated to expand by 2.3% in 2023. The labor force remains largely stable, and the overall unemployment rate is expected to remain low, despite an increase in retrenchment. Projections indicate a potential easing of both headline and core inflation, averaging 3.0%-4.0% and 2.5%-3.5%, respectively, in 2024. Currently, Singapore’s household balance sheet remains robust, providing a solid foundation for homebuying activities.
Analysts express optimism that the Federal Reserve of the United States might implement an interest rate cut of up to 75 basis points in 2024. Such a move could inject momentum into the residential market, fostering increased transaction volume throughout the year.
Residential Home Prices
The overall residential property price index recorded a modest increase in 2023, showing a growth of 3.9% in 3Q 2023 compared to the beginning of the year. Among the regions, the Core Central Region (CCR) witnessed a decline in non-landed home prices, falling by 2.0% over the first nine months of 2023. Conversely, new home prices contributed to the rise in Rest of Central Region (RCR) and Outside Central Region (OCR) non-landed home prices, increasing by 4.0% and 8.8%, respectively, during the same period.
Landed home prices remained relatively stable, experiencing a modest 3.2% increase over the last nine months of 2023. This contrasts with the previous two years when the COVID-induced surge led to significant year-on-year increases of 13.3% in 2021 and 9.6% in 2022.
The forecast for the overall residential property price index indicates a year-on-year growth of 4%-5% in 2023, with an additional projection of 5%-6% in 2024. Meanwhile, landed home prices are expected to maintain relative stability, with a potential growth of up to 2% by the end of 2024.
Non-Landed New Homes
As of December 15, 2023, data from caveats reveals that the islandwide average price for new homes in the fourth quarter reached $2,541 per square foot (psf), marking a year-on-year growth of 8.9%. Following a period of limited new home launches since August, November introduced projects like J’den and Watten House, both achieving exceptional sales and setting benchmark prices. J’den secured a median price of $2,475 psf, while Watten House reached a median price of $3,198 psf.
Despite an increase in new property launches throughout the year, sales volume has shown moderation. In 2023, the new home market witnessed 22 new launches and one Executive Condominium (EC) launch. It is estimated that around 7,600 newly TOP homes (excluding EC) could be introduced in 2023, reflecting a 52% increase from the 2022 figure of 4,987 units.
The top five best-selling projects by units in 2023 are The Reserve Residences, Grand Dunman, Lentor Hills Residences, Tembusu Grand, and J’den. We anticipate a total new home sale ranging between 6,500 and 7,000 in 2023, slightly below the 2022 figure of 7,099 new homes sold.
Buyer Profile for New Homes
The increase in Additional Buyer Stamp Duty (ABSD) in April 2023, which involved a doubling of ABSD for foreign buyers, has significantly reduced demand from foreign buyers across various market segments. Among these segments, the Core Central Region (CCR) experienced the most pronounced impact. Before the pandemic, foreign buyers comprised nearly a quarter of home buyers in CCR, but since 2020, this proportion has consistently hovered between 12% and 14%. Both the Rest of Central Region (RCR) and Outside Central Region (OCR) have also witnessed declines, albeit marginal, in the proportion of foreign buyers.
Government Land Sales (GLS) Exercise
In 2023, a total of eight residential and two Executive Condominium (EC) sites were successfully awarded. Several Government Land Sale (GLS) sites have garnered as many as six bids this year, indicating heightened competition among developers. Additionally, there has been a noticeable trend of developers forming partnerships and submitting joint bids. Both of the EC sites received significant attention, attracting a total of nine bids.
In response to the decreasing unsold residential stock, which stood at only 17,576 units (including ECs) in 3Q 2023, developers have shown eagerness to replenish their land bank. The escalating land costs are expected to contribute to higher new home prices in the short term. For example, the Toa Payoh Lor 1 site, which concluded in November, secured a bid of $968 million, translating to a land rate of $1,360 per square foot per plot ratio (psf ppr). Similarly, the Pine Grove (Parcel B) site received a bid of $692 million ($1,223 psf ppr), and the Clementi Avenue 1 site garnered a bid of $633 million ($1,250 psf ppr).
New Home Outlook
This year in 2024, there could be as many as 32 new home launches and one EC launch scheduled in the pipeline. This could contribute to a total of more than 11,000 new homes. The 2023 land sale performance suggests prices of new homes in 2024 will continue to grow at a more measured pace. We forecast prices of new homes to grow between 3%-6% by end-2024 while demand for new homes in 2024 will remain largely similar to 2023, falling in the range of 7,000 to 8,000 units.
Non-Landed Resale & Sub-Sale Market
As of December 15, 2023, data from lodged caveats reveals that the islandwide average for non-landed resale prices experienced a growth of 5.7% in 2023, while the average non-landed sub-sale prices grew by 1.5% year-on-year (y-o-y).
A total of 9,455 resale units were sold, marking the lowest transaction volume since 2020, with an additional 1,095 sub-sale units sold in 2023. Compared to 2022, resale transactions have moderated, declining by 22.0% y-o-y. Conversely, sub-sale transactions have surged significantly by 56.7% y-o-y, driven by the approaching completion of more new homes.
The increasing price gap between new homes and resale homes has prompted some buyers to shift their focus towards the sub-sale and resale market. Notably, the Rest of Central Region (RCR) and Outside Central Region (OCR) have witnessed a higher number of newly completed homes transacted in recent months, a trend expected to persist into 2024. Newly completed homes have gained popularity among buyers due to their brand-new condition and immediate readiness for occupancy.
New Homes Completions
In 2023, a total of approximately 19,000 private residential units (excluding Executive Condominiums or ECs) are anticipated to be completed, marking the highest annual supply completion since 2016. Additionally, another 10,000 units are scheduled to be completed in 2024.
Resale and Sub Sale Outlook
The increase in new home completions is expected to influence the trajectory of resale price growth and contribute to transaction volume in 2024. ERA projects that for the entirety of 2023, the average non-landed resale and sub-sale prices could see a year-on-year increase of 6% in 2024. The total number of non-landed resale and sub-sale transactions is estimated to range between 11,000 and 11,500 units in 2023, with an anticipated increase to a range of 12,000 to 13,000 units in 2024.
Landed Homes
In 2023, the landed property segment experienced sluggish sales, primarily attributed to elevated home prices and a limited inventory. Landed homeowners, possessing stronger holding power and facing increased replacement home costs, tended to set higher prices and displayed limited urgency to sell. Despite stable demand, more landed deals fell through as buyers and sellers reached an impasse regarding home prices.
Landed home prices remained steady, registering a modest 3.2% increase over the last nine months of 2023. This contrasts with the preceding two years, where the COVID-induced boom propelled landed prices to surge by 13.3% and 9.6% year-on-year in 2021 and 2022, respectively.
The overall volume of landed property transactions declined to 1,198 units, with the total transaction value reaching $6.9 billion. In comparison to the previous year, both transaction volume and value decreased by 28.8% and 27.4%, respectively. For the entire year of 2023, the total volume of landed property transactions is projected to reach 1,200–1,300 units, with the total transaction value expected to exceed $7 billion.
Looking forward to 2024, the landed property segment is anticipated to witness subdued activities, primarily due to rising costs. We predict that the total landed transaction volume could moderate to a range between 1,100 and 1,200 units, with the total transaction value ranging between $6.0 billion and $6.5 billion. Landed home prices are expected to remain relatively stable, with a potential growth of up to 2% by the end of 2024.
Conclusion
Looking into 2024, the new home segment may witness up to 32 new home launches and one Executive Condominium (EC) launch already scheduled in the pipeline. We predict that the prices of new homes could experience growth ranging between 3% and 6% by the end of 2024, primarily influenced by higher land prices. The anticipated demand for new homes in 2024 is expected to moderate within the range of 7,000 to 8,000 units.
The increased number of new home completions in 2024 is likely to regulate the pace of non-landed resale price growth and drive transaction volume. We project that non-landed resale prices could potentially increase by up to 6% year-on-year in 2024, with the total resale and sub-sale transactions ranging between 12,000 and 13,000 units.
Contrastingly, the landed property segment is anticipated to experience subdued activities with stable price growth in 2023. We foresee the total landed transaction volume could moderate to a range between 1,100 and 1,200 units, with the total transaction value expected to fall between $6.0 billion and $6.5 billion. Landed home prices are projected to remain relatively stable, with a potential growth of up to 2% by the end of 2024.
In conclusion, the private residential market seems to have taken a positive turn. Macroeconomic indicators are showing signs of cautious optimism in 2024, instilling quiet confidence that the residential market will recover during the year. The second half of 2024 is projected to bring about more positive economic developments that could propel the Singapore private residential market further.