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URA flash estimate of the price index for private residential property for 1st Quarter 2023

Xian Yang Wong • 03/04/2023

According to URA flash estimates, private residential property prices continue to trend higher, rising by 3.2% qoq. The market saw a broad-based increase in prices, with both landed and non-landed prices rising by 5.7% and 2.5% qoq respectively in Q1 2023. The continued rise in private residential prices reflects unflinching housing demand despite economic headwinds such as higher interest rates and weaker economic growth, and a rise in Buyer Stamp Duties (for high-value properties). While prices have gone up, overall volumes have dropped. On a yoy basis, Q1 2023 volumes (landed and non-landed) are estimated to be about 20-25% lower as compared to Q1 2022. While the balance of power still remains with sellers, though buyers are showing increasing resistance to further price increases and some are choosing to wait on the sidelines.

The jump in landed prices could be due to fairly thin volumes in Q1 2023, and landed prices could potentially moderate in Q2 2023. Nonetheless, the sustained growth in landed prices is a testament to continued underlying local demand amidst resilient economic conditions. Buyers remain price takers as sellers are in no hurry to sell as landed supply is limited in land scarce Singapore.

For the non-landed segment, all three market segments saw prices grow, with outperformance in the Rest of Central Region (RCR), with qoq growth of 4.0% in Q1 2023. The Core Central Region (CCR) and Outside Central Region (OCR) grew 1.0% and 1.9% qoq. The RCR outperformance was driven by the new sales market, which saw RCR new sale prices grow by an estimated 5.2% qoq, to $2655 psf in Q1 2023 from $2523 psf in Q4 2022, based on current caveat data (pulled 03/04/23). According to caveat data, the bulk of RCR new sale transactions were attributed to Terra Hill, a freehold project, which drove about 39% of RCR new sales in Q1 2023. Terra Hill sold about 97 units at a median transacted price of $2699 psf, according to caveat data. RCR resale prices were largely stable in Q1 2023.

Also, notably, while the RCR and OCR saw a yoy decline in transaction volumes, CCR was the only market that saw a yoy increase in volumes, suggesting increasing buyer interest as CCR prices have lagged the broad market.

Despite an economic slowdown and heightened interest rates, private home prices are still expected to lock in positive growth this year, albeit at a slower pace of about 3%-5% in 2023. This compares with a 8.6% growth in private home prices in 2022. The rise in prices would be supported by a confluence of factors. On the demand side, a stable job market, rising rents and sustained HDB upgrader demand due to rising HDB resale prices, would support underlying demand in the market. The re-opening of China, could also bolster market sentiments and slightly contribute to overall demand. Also, developers whom face heightened development risks and construction costs are unlikely to cut prices given that unsold inventory remains low. Higher levels of new supply are expected to enter the market this year, and this could alleviate some upward rental and price pressure in the market.

Though prices are expected trend higher, buyers should exercise prudence and buy within their means as downside risks have crept up as well. Private residential prices are at their historical highs, and the global economy remains fragile amidst heightened interest rates


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