Prices
Prices of private homes fell for the first time since the second quarter of 2023
Prices of private homes in the third quarter declined 0.7 per cent, a reversal from the 0.9 per cent growth in the second quarter of this year, according to the data released by the Urban Redevelopment Authority (URA). 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 decline may be attributed to more consumers opting for lower-value private homes for better affordability. Consequently, most new transactions excluding EC took place in the suburban OCR, which rose from 414 units (57.1 per cent of the total 725 new sales) in Q2 2024 to 715 units (61.6 per cent of the total 1,160 new sales) in Q3 2024. As most of such suburban properties were sold at lower prices than other market segments, the high sales volume dragged down the overall price index for the entire market.
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.
Volume
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.
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.
Rental
The private rental market turned a corner as rents increased for the first time in over six months. According to the Urban Redevelopment Authority (URA) rental index, there was a rebound of 0.8 per cent in overall rents, following declines of 0.8 per cent in Q2 2024 and 1.9 per cent in Q1 2024. This marks the first increase since rents rose 0.8 per cent in Q3 2023.
During the first three quarters of 2024, there was a 1.9 per cent decline in overall rents, marking a stark contrast to the robust 11.1 per cent growth observed during the same period in 2023.
The rental landscape in the latter half of this year significantly differed from the preceding quarters. Previously, the market was adversely affected by an abundant supply of completed private homes in 2022 and 2023. With more attractive rental rates, some tenants were drawn back to the private market from public housing. Moreover, many companies began to increase their staff numbers and expand their operations to capitalise on the improving economy, which experienced a more favourable employment outlook and lower interest rates.
Outlook
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 suburban 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.