Prices
Private home prices in the second quarter of 2023 declined by 0.2 per cent, reversing the 3.3 per cent increase in the first quarter, data from the Urban Redevelopment Authority (URA) showed. This marks the first decline since Q1 2020 when prices fell 1 per cent during the onset of Covid-19.
Year on year, the index is up 7.5 per cent. Year to date, private home prices edged up 3.1 per cent in the first six months of this year, less than the 4.2 per cent registered in the first half of 2022 and 4.1 per cent in the first half of 2021. The data shows that the prices show signs of moderation and stabilisation.
The slower price growth may be attributed to the new cooling measures implemented on September 2022 and April 2023, which raised the ABSD and affected the borrowing ability of buyers. Some buyers continue to face high borrowing costs as interest rates remain elevated. Sellers are also facing more pressure as supply gradually builds up with more private home completions. The stock of completed private residential units has increased by 4,227 units in Q2 2023, up from an increase of 2,864 units in the previous quarter.
Volume
Overall sales volume rebounded last quarter as more projects were launched. Overall sales (excluding ECs) surged by 30.7 per cent from 4,121 units in Q1 to 5,388 units in Q2 2023. However, on a year-on-year basis, sales dipped by 20.9 per cent from 6,811 units in Q2 2022.
Last quarter's higher sales were led by the new sales market, where new home transactions, excluding ECs, surged by 69.3 per cent from 1,256 units in Q1 2023 to 2,127 units in Q2 2023. The number of resale transactions also rose 13.5 per cent q-o-q and subsales increased 17.3 per cent q-o-q.
Rental
Rental growth slowed last quarter. According to URA data, rents climbed higher to a record in Q2 2023. In the first quarter of this year, rents rose further by 2.8 per cent q-o-q, after surging 7.2 per cent in the preceding quarter and 7.4 per cent in the fourth quarter of last year.
The smaller rental growth indicates that the rental market similarly faces some price pressures. There is more supply of new homes, while locals who had been renting have begun to vacate their rental units and are shifting into their new condos or flats. Moreover, there remains a big disparity between landlords' and tenants' rental price expectations. Now, rental deals are taking longer to negotiate and close.
With more completions, the vacancy rate rose to a seven-quarter high to 6.3 per cent. Nevertheless, occupancy rates remained robust, above 90 per cent at 93.7 per cent last quarter.
Outlook
Barring a global economic downturn or unforeseen circumstances, buying activities may persist in the second half of this year. A few big projects have already been launched in July. More private homes will also be completed, which may translate to more units being put up for resale.
Moreover, some Singaporeans will continue to downgrade to unlock their property values for retirement, while others upgrade their properties as part of asset progression. With more housing supply coming onstream, we estimate that overall property prices will continue stabilising, and the full-year growth could be slower at around 4 to 6 per cent, compared to 8.6 per cent in 2022 and 10.6 per cent in 2021.
For the new sale market, between 7,000 and 8,000 new homes excluding ECs could be sold in 2023, slightly higher or on par with the 7,099 units sold in 2022.