Prices of private homes fell for the first time since the second quarter of 2023 as more consumers opted for lower-value private homes. 

Prices of private homes in the third quarter declined by 0.7 per cent, a reversal from the 0.9 per cent growth in the second quarter of this year, according to data released by the Urban Redevelopment Authority (URA) (Chart 1). This is the biggest quarterly decline since Q1 2020, when prices fell 1 per cent. 

In the first three quarters of 2024, there was a 1.6 per cent increase in prices, which was significantly slower than the 3.9 per cent upturn observed during the corresponding period in 2023 and 8.2 per cent growth in the first three quarters of 2022.

The price decrease was led by the landed segment, which declined by 3.4 per cent. Prices of non-landed properties – or condos and apartments – rose marginally by 0.1 per cent in the third quarter of 2024. 

Among the sub-markets, prices of condos and apartments dipped the most by 1.1 per cent in the luxury or the Core Central Region (CCR). Prices remained unchanged in the suburbs or Outside Central Region (OCR), while prices rose by 0.8 per cent in the city fringe or the Rest of Central Region (RCR) (Chart 2). 

Similarly, in the secondary market, most transactions were in the suburban OCR, accounting for 54.7 per cent (2,113 units) of the total resale volume (3,860 units) in the third quarter of 2024. 

For new sales, although more new homes were sold last quarter, the average price of new private homes—both landed and non-landed, excluding executive condominiums—fell by 3.5 per cent. It dropped from S$2,419 per square foot (psf) in the second quarter of 2024 to S$2,333 psf in the third quarter of 2024, according to data from URA Realis (see Table 1). For resale, average resale prices remained unchanged over the same period even though more buyers were diverted to the primary market. 

Private home sales (non-landed and landed excluding EC) increased by 9.3 per cent from 4,915  in the second quarter of 2024 to 5,372 units in the third quarter (Chart 4). 14,517 private homes, excluding EC, were sold in the first three quarters of 2024, lower than the 14,710 units sold over the same period in 2023.

Last quarter, the sales growth was largely led by an uptick in new home demand. New home sales surged 60 per cent from 725 units in Q2 2024 to 1,160 units in Q3 2024. The sales increase can be attributed to more private homes launched in Q3, which jumped by 102.5 per cent from 634 units in Q2 2024 to 1,284 units in Q3. 

On the other hand, the secondary market exhibited a more subdued performance due to increased competition from the primary market. Resale volume rose by a slower pace of 1.5 per cent from 3,802 units in Q2 2024 to 3,860 units in Q3 2024. 

In the fourth quarter, we anticipate a rise in private home transactions due to the launch of several prominent projects, including Norwood Grand, The Chuan Park, Emerald of Katong, Nava Grove and Union Square Residences. These large developments will provide more housing options for buyers. Sales volume for new homes will likely rise in the second half of 2024 and exceed those in the first half. The new project launches may also have a spillover effect on the secondary market. Some buyers may explore the lower-price resale homes that are close by. 

After the Federal Reserve announced the interest rate cut in September, we do not expect an immediate surge in home buying. This is because most financial institutions likely have already factored the interest rate adjustments into their mortgage plans. However, should the Federal Reserve continue to lower interest rates in the coming months, buying sentiment is expected to improve as housing becomes more affordable. Furthermore, the drop in interest rates could encourage people to buy bigger homes or properties in high-end areas, as their mortgage payments would decrease. As a result, there may be an increase in interest for new property launches in both city fringe and prime locations.