Overview
Private home prices rose for a second consecutive quarter, albeit at a slower pace compared to the first quarter. The URA property price index (PPI) released by the Urban Redevelopment Authority (URA) posted smaller gains of 0.6 per cent in the first quarter of 2025, easing from the 2.3 per cent growth in Q4 2024.
The slower overall price growth may be attributed to the smaller price increments for non-landed properties – or condos and apartments – which climbed by 0.6 per cent in the first quarter, down from the 3 per cent gain in the fourth quarter of 2024. However, landed prices rebounded by 0.6 per cent, reversing from the 0.1 per cent drop over the same period.
Prices in sub-markets
Among the submarkets, a slower growth can be observed across the board. Prices of non-landed properties rose by 0.3 per cent in the suburbs or Outside Central Region (OCR) in Q1 2025, following a 3.3 per cent increase in Q4 2024. Prices in the prime area or the Core Central Region (CCR) rose 0.6 per cent, slowing down from the 2.6 per cent gains in the preceding quarter. In the city fringe or the Rest of Central Region (RCR), prices climbed by 1 per cent, down from the 3 per cent growth in Q4 2024.
Reasons behind the slower price growth
Firstly, the slower price growth may be attributed to an increased market share of suburban homes, which are typically sold at lower prices compared to other properties in city fringe and prime areas. For instance, the proportion of private home sales in OCR (landed and non-landed, excluding EC) rose from 47.6 per cent in Q4 2024 to 59.2 per cent in Q1 2025, according to URA Realis caveat data. Conversely, the proportion of private homes in RCR dipped from 42.1 per cent to 29.4 per cent over the same period. For CCR, the proportion increased marginally from 10.3 per cent to 11.4 per cent.
Secondly, the proportion of non-landed homes (excluding EC) sold for less than S$2 million rose from 56.3 per cent in Q4 2024 to 57.9 per cent in Q1 2025. Conversely, transactions that were at least S$2 million but less than S$3 million dipped from 30.8 per cent to 29.9 per cent over the same period. Similarly, higher-priced transactions of at least S$3 million fell from 12.9 per cent to 12.2 per cent.
Thirdly, although the number of non-landed new sale transactions (excluding EC) in Q1 2025 (3,311 units) remained about the same level as Q4 2024 (3,368 units), 1,705 units were sold at lower price tags of below S$2 million in Q1 2025, which was significantly more than the 1,432 units inked in Q4 2024. Conversely, new non-landed homes sold at higher price tags of at least $3 million dropped to 423 units from 526 units over the same period.
Market Outlook
There may be increasing uncertainties regarding interest rate trends. Since the start of the year, global inflation rates and central bank interest rates have varied vastly across major economies. Possible trade wars triggered by the United States' tariff policies could increase inflation, potentially causing interest rates to remain elevated for a longer period. This is despite many countries, including Singapore, implementing rate cuts since mid-2024 in response to declining inflationary pressures.
In Singapore, the property market is not expected to experience significant effects from potential trade wars and interest rate fluctuations in the near term, unless these issues persist over a prolonged period. The private residential market is currently driven by domestic buyers, particularly HDB upgraders, who are financially supported by the strong proceeds from the sale of their flats in a robust HDB market. If employment remains stable, income continues to grow, and the HDB market continues to thrive, consumer confidence and spending are expected to remain favourable, which will in turn benefit the private residential market.