Singapore’s Private Home Prices Up by 3.2% in Q1 2023: Unveiling the Key Drivers and Future Outlook
Overview: A Robust Growth in Private Residential Property Prices
In Q1 of 2023, Singapore’s private residential real estate market witnessed a noteworthy augmentation of 3.2% q-o-q, as divulged by the Urban Redevelopment Authority’s (URA) preliminary calculations. This advancement outpaced the preceding trimester’s 0.4% upswing, with y-o-y valuations soaring by 11.3%. This composition probes the elements spurring this escalation, the comportment of landed and non-landed domiciles, and the prospective trajectory of Singapore’s exclusive abode sector.
Main Growth Factors: New Projects and Unwavering Housing Demand
The upswing in private residential prices can be attributed to a few factors. First, new projects launched in the last quarter, such as the 270-unit Terra Hill at Yew Siang Road, fueled the growth. Second, unwavering housing demand persisted despite economic challenges, including higher interest rates, weaker economic growth, and increased buyer stamp duties for high-value properties.
Wong Xian Tang, Head of Research for Singapore and Southeast Asia at Cushman & Wakefield, highlights that the continued growth in private residential prices reflects the robust housing demand. Similarly, independent property market observer Nicholas Mak emphasizes the market’s resilience following the cooling measures announced in September 2022.
Performance of Landed and Non-Landed Properties
Landed Properties: Strong Demand Driving Price Growth
In Q1 2023, landed property prices rose by 5.7% q-o-q, with sales at Pollen Collection, a 132-unit development in Seletar Hills by Bukit Sembawang, contributing to this growth. Tricia Song, Head of Research, Southeast Asia, at CBRE, points out that the median prices for terraced houses at Pollen Collection increased from $1,893 per square foot (psf) in Q4 2022 to $2,199 psf in Q1 2023.
Leonard Tay, Head of Research at Knight Frank Singapore, notes that the demand for landed properties remains strong, as buyers are willing to pay a premium for this scarce housing format in high-rise Singapore.
Non-Landed Properties: Faster Price Growth Led by Rest of Central Region
Non-landed property witnessed a 2.5% quarterly augmentation, surpassing the prior quarter’s 0.3% escalation. Consequently, the Rest of the Central Region (RCR) underwent a 4% quarterly appreciation, while the Outside Central Region (OCR) and Core Central Region (CCR) observed ascents of 1.9% and 1% quarterly, in that order.
The launches of new projects like Terra Hill in RCR, Seneca Residence in Tanah Merah, and The Botany at Dairy Farm in Dairy Farm Walk contributed to this growth, achieving prices of $2,650, $2,072, and $2,070 psf, respectively.
Future Outlook: Cautious Optimism Amid Economic Headwinds
Despite the robust growth, Song from CBRE expects a more cautious sentiment among buyers in the coming months due to high-interest rates, tighter financing conditions, and a slowing economy. However, she maintains her forecast of 7,500 to 8,500 new private home sales in 2023, considering upcoming launches such as Tembusu Grand, The Continuum, and Lentor Hill Residences.
A mega development to be unveiled is the upcoming Grand Dunman Condo, a luxurious new condominium development set to debut in the highly sought-after Dakota district in Q3 of 2023. This prestigious development has been designed to embody opulence and elegance and promises to redefine modern living within an esteemed neighborhood.
Wong from Cushman & Wakefield anticipates private home prices to experience favorable growth in 2023, albeit at a slower pace of approximately 3% to 5%, compared to the 8.6% surge recorded last year. He identifies several factors supporting this growth, including a stable job market, sustained HDB upgraded demand due to rising HDB resale prices, China’s reopening, and low unsold inventory levels.
The Role of Foreign Buyers in Singapore’s Residential Property Market
In Q1 2023, the local residential property market witnessed a resurgence of foreign buyers. Lee Tze Teck, Senior Director of Research at Huttons Asia, reveals that out of the 1,403 new project units sold, foreign buyers purchased an estimated 127 units, as per caveats as of March 31. Top projects favored by foreign buyers in Q1 2023 include Riviere, Klimt Cairnhill, Perfect Ten, Leedon Green, Pullman Residences and The Botany at Dairy Farm.
Conclusion: A Market Poised for Continued Growth Amid Economic Challenges
Singapore’s private residential property market has demonstrated remarkable resilience in Q1 2023, with private home prices growing by 3.2% q-o-q. New project launches, relentless housing demand, and the resurgence of foreign buyers have driven the market’s performance. While economic headwinds may result in a more cautious sentiment among buyers, experts maintain a positive outlook for the sector, with upcoming launches potentially driving demand and prices expected to experience moderate growth throughout 20