Prices
Overall prices rebounded at a marginal pace of 0.8 per cent in Q3 2023, according to data from the Urban Redevelopment Authority (URA). Although prices rebounded from the 0.2 per cent decline in the second quarter, this is the second consecutive quarter when price gains were less than 1 per cent and lower than the past three years quarterly average price growth of 2.1 per cent from Q3 2020 to Q2 2023. Year to date, prices edged up 3.9 per cent in the first nine months of this year, a smaller increment compared to the same periods in 2022 at 8.2 per cent and 2021 at 5.3 per cent.
Volume
There were more signs of price resistance as sales (excluding EC) contracted by 3.5 per cent in the third quarter of this year to 5,201 units from 5,388 units in Q2 2023. Year-on-year, sales fell by 15.4 per cent from 6,148 units in Q3 2022.
Resale volume slipped last quarter as some demand may have been diverted to the primary market. There were ten new project launches (including EC) last quarter. Resale volume fell by 2.6 per cent from 2,976 units in Q2 2023 to 2,900 units in Q3 2023, while new sales dipped by 8.5 per cent from 2,127 units to 1,946 units over the same period.
Rental
Rental growth slowed further last quarter. In the third quarter of this year, rents rose by 0.8 per cent, less than the 2.8 per cent q-o-q increase in the second quarter, and remarkably slower than the 7.2 per cent in the first quarter. Rent momentum has also eased across all market segments, with CCR being the hardest hit with a q-o-q rental decline of 1.7 per cent.
The rent price moderation is within expectation as rents escalated too quickly last year. Price resistance has set in as more tenants shifted out from the private market in search of cheaper accommodation in other market segments. Others have moved from Singapore entirely as they face high rentals and rising cost of living.
With more new home completions, the vacancy rate rose to 8.4 per cent, the highest since Q3 2016 at 8.7 per cent (Q3 2017 and Q4 2016 also registered a vacancy rate of 8.4 per cent). Nevertheless, occupancy rates remained robust, above 90 per cent at 91.6 per cent last quarter.
Outlook
The property market will continue to be affected by the interest rate environment. Homeowners face steep monthly mortgages as interest rates stay higher for longer than anticipated. Consumers will remain prudent amid fresh uncertainties on the geopolitical front and slower-than-expected global economic growth.
We estimate that overall prices may grow by 4 to 5.5 per cent in 2023. Total sales volume (excluding EC) may range between 17,000 and 19,000 units, lower than the 21,890 units sold in 2022.