Commentary on the flash estimate of Q1 2024 private residential property price index

By Tricia Song (宋明蔚), Head of Research, Southeast Asia, CBRE

Flash estimates based on transactions in the first 10 weeks in Q1 2024 show that Singapore’s private housing prices rose for a third straight quarter, albeit at a slower pace, despite continued slow transaction volumes. Developer sales have been tepid, hitting a 15-year low of 6,421 units in 2023 on weak economic conditions, buyer fatigue and increasing resistance to high price points. While transaction activity continued to dwindle, prices remained resilient in Q1 2024. 

Flash estimates show that private home prices rose 1.5% q-o-q in Q1 2024, moderating from the 2.8% q-o-q increase in Q4 2023. Price growth was mainly underpinned by landed properties which continued to post a moderate increase of 3.4% q-o-q after Q4 2023’s 4.6% q-o-q rise while prices in the non-landed segment slowed further to 1% q-o-q from 2.3% q-o-q growth in Q4 2023. 

The increase in prices of non-landed properties was driven by properties in the Core Central Region where prices rose by 3.1% q-o-q in Q1 2024. Overall growth in non-landed properties, however, was held back by subdued price increases in the RCR and OCR which recorded 0.2% and 0.4% q-o-q rises in Q1 2024 respectively.  
• During the quarter, the public launch of Watten House in the CCR appears to have boosted sentiment in the segment, with existing projects such as Perfect Ten seeing transactions at higher median prices.
• In the RCR, the only new launch was The Arcady at Boon Keng, which sold 27% of its 172 units at a median price of S$2,574 psf in January. 
• In the OCR, new project launches in the Lentor area, Lentoria and Lentor Mansion had been priced competitively, in view of the abundant supply, while the new launch in January, Hillhaven, was also competitively priced at a median price of S$2,067psf. 
     
Outlook
Based on caveats downloaded from realis on 1 Apr 2024 (today), 1,030 new private homes (excluding ECs) were sold in Q1 2024, 5.7% lower than the 1,092 units moved in Q4 2023. New home sales picked up in March after the lull in January and February, as the two new launches in Lentor area – Lentoria and Lentor Mansion collectively sold nearly 460 units in March. However, we see increasing buyer selectiveness amid uncertain economic conditions and as average private home prices have risen 34.5% since Q1 2020.  Negative newsflows from a slew of company layoffs, albeit globally which could have further dented buying sentiment to start the year.

CBRE Research is cautiously optimistic on the private residential market in 2024. The current tentative buying sentiment could stretch into H1 2024 amid still-high interest rates and uncertain economic conditions. However, we do not expect a significant correction with still-low unemployment rate, resilient household balance sheets, and possibly a stronger economic recovery in H2 2024 -- MTI forecasts 1 – 3% GDP growth for 2024 compared to 1.1% in 2023. 

Correspondingly, we expect 7,000-8,000 new homes could be sold in 2024, an improvement from about 6,421 units for the whole of 2023 but still below the 5-year average new developer sales across 2019 – 2023 of 9,288 units. 

Private residential prices which are up 1.5% based on Q1 2024’s flash estimate could rise at a slower pace in Q2 2024 before picking up again in H2 2024 if interest rates fall and the economy recovers. CBRE Research maintains our price forecast at 3 – 4% in 2024. A significant correction is not expected given still-low unemployment rate, resilient household balance sheets, and low unsold inventory.