Commentary on the flash estimate of Q2 2024 private residential property price index

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

URA’s flash estimate of the price index for private residential properties for Q2 2024 shows that Singapore’s private housing prices rose for a fourth straight quarter but continued to decelerate along with developer sales 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. This tentative buying sentiment persisted into H1 2024, with 1,843 units transacted in H1 2024 (data up to mid-June), on track to becoming the lowest half-year developer sales on record, even lower than the 1,977 units recorded in H2 2008 during the Global Financial Crisis (GFC). However, the key difference between now and H2 2008 is that secondary sales volumes are holding up in 2024, as the market is still interested but price-conscious buyers have turned to secondary stock as the price gap between primary and secondary stock widens. Secondary sales transaction volumes in Q2 2024 (up to mid-June 2024) rose to 3,344, up from 3,066 units in Q1 2024, and also an increase compared to the quarterly average of 3,156 units in the full year 2023. In 2008, property prices, developer volumes and secondary volumes plummeted together as the bubble busted during the GFC.  

Flash estimates show that private home prices rose 1.1% q-o-q in Q2 2024, moderating from the 1.4% q-o-q increase in Q1 2024. With this, prices have increased 2.5% YTD, and up 35.8% since the COVID-19 trough in Q1 2020. Q2 2024 private home price growth was led by landed properties which posted an increase of 1.8% q-o-q after Q1 2024’s 2.6% q-o-q rise, while price growth in the non-landed segment was stable at 0.9% q-o-q from 1.0% q-o-q growth in Q1 2024. 

The increase in prices of non-landed properties was mixed, with RCR prices up 2.2% q-o-q in Q2 2024, while OCR grew a very flattish 0.3% and CCR declined 0.2%. This compares to price growth of 3.4%, 0.3% and 0.2% in Q1 2024 for the CCR, RCR and OCR respectively.   
• The CCR saw some price adjustments likely on the re-launches of The Residences at W Sentosa Cove and Cuscaden Reserve in the 1H 2024 at lower average prices of S$1,780 psf and S$2,900 psf respectively. Some projects such as Klimt at Cairnhill moved more units on some discounts. 
• In the RCR, 2 relatively small new launches, The Hill @One-North and The Hillshore launched at high price points to lukewarm response, while recently completed projects such as Parc Esta, Jadescape and Stirling Residences continued to trade higher with their attractive location near MRT stations. 
• In the OCR, ongoing launches such as The Myst, The Botany at Dairy Farm and the various Lentor projects continued to sell at a steady rate at stable pricing. Secondary sales transactions at mega projects Treasure at Tampines, Affinity at Serangoon and The Florence Residences observed flat pricing, possibly due to the larger number of units available for sale. 
     
Outlook
Based on caveats downloaded from realis on 1 Jul 2024 (today), 679 new private homes (excluding ECs) were sold in Q2 2024, 41.7% lower than the 1,164 units moved in Q1 2024.
H1 2024 developer sales currently stand at 1,843 units, 45.5% lower y-o-y from 3,383 units sold in H1 2023. Buyers have turned more selective amid a myriad of new launch options, buyer fatigue and increasing resistance to high price points, with generally lower take-up rates across 2024 project launches. Homebuyers’ current tentative stance is likely to persist until interest rate cuts and an economic rebound catalyse a recovery in sentiment.

Looking ahead, with the expectation of a delay in interest rate cuts amid protracted economic uncertainty, the timeline for a recovery in new developer sales is likely to be pushed to 2025. CBRE Research expects 5,500 – 6,500 new homes to be sold in 2024. While H1 2024 sales have been weak so far, overall sales for the year could come close to 2023’s 6,421 units with more major launches anticipated in the H2 2024 pipeline. Attractive developer pricing remains key to healthy new launch performance.  

Private residential prices which are up 2.5% in H1 2024 based on Q2 2024’s flash estimate is expected to stabilise and rise at a slower pace in H2 2024 with the pushback in the timeline for interest rate cuts and anticipated economic recovery. 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. HDB resale price index rose 2.1% q-o-q in Q2 2024, accelerating from the 1.8% in Q1 2024. Barring a major economic shock , the public housing market could continue to support the OCR and RCR segments of the private market going forward.