Property resale market stabilising, may have peaked: PropertyGuru report

SINGAPORE: The market for Housing and Development Board (HDB) resale flats may have peaked, with slowing price growth and dipping demand, according to a PropertyGuru report on Monday (Aug 7).

Data also shows that the private home market is also reaching its peak and prices may stabilise in the coming quarters, the report added.

Analysis of more than 600,000 listings on PropertyGuru Singapore's website found that the residential property market shows signs of deceleration, the company said.

One signal is the Singapore Property Sale Demand Index for HDB resale flats, which has declined by 6.4 per cent in the second quarter of this year. This index tracks the number of enquiries of all property sale listings on PropertyGuru Singapore.

"Considering that the Sale Demand Index can be interpreted as an early indicator of market trends – as it reflects buyer interest at the beginning of their property search – these figures hint that the HDB resale market may have reached its peak," said the PropertyGuru's Singapore Property Market Report for Q3 2023.

The increase in asking prices for HDB resale flat listings also slowed in the second quarter of 2023, growing 0.6 per cent, compared with a 1.6 per cent increase in the first quarter.

The median asking price of a 1,000 sq ft four-room flat is now S$571,900 (US$425,000), up from S$555,800, based on PropertyGuru data.

The gap between what buyers are willing to pay and what sellers are asking for is not expected to narrow significantly, said PropertyGuru.

However, property seekers are less pressured to meet the high prices as they have more choices – more Build-to-Order (BTO) flats are being completed, and about 16,000 flats are set to fulfil their minimum occupation period (MOP) this year. HDB flats can only be sold after the MOP.

A Huttons report on Tuesday on HDB prices in the second quarter also noted a "moderation in price growth" which may be due to growing BTO supply, price resistance from buyers and property cooling measures.

Property cooling measures were implemented in December 2021, September 2022, and April this year.

However, prices remain high with the HDB resale price index gaining 33.6 per cent since the "circuit breaker" in the second quarter of 2020. It is also 17.9 per cent above the last peak in the second quarter of 2013.

PRIVATE PROPERTIES

For non-landed private homes, the PropertyGuru report said that the median asking prices of listings on its website recorded a modest growth of 0.3 per cent, down from a 0.9 per cent increase in the first quarter.

The median asking price for a 1,000 sq ft three-bedroom private apartment is now S$1.98 million. This is up from nearly S$1.8 million a year ago.

"The September 2022 and April 2023 cooling measures, together with the supply-side policies, have shown to be effective in tempering sentiments and preventing the market from overheating – the same is expected in the coming quarter," the report said.

The Sale Demand Index for non-landed private property decreased by 2.3 per cent. PropertyGuru said that the figures "support the idea that the market is reaching its peak and we can expect prices to stabilise in the coming quarters".

It added that next year, buyers are likely to have more options as the government has increased the supply of private housing in its land sales.

However, new major condominium launches are likely to continue to fetch a significant premium over resale homes, leading to sharp jumps in the transacted median unit prices in districts with new launches.

"Buyers are becoming more judicious in their decisions. They would likely channel their financial resources to only one property for own-stay purposes," said Dr Tan Tee Khoon, Singapore country manager at PropertyGuru.

"Buyers are expected to gravitate towards projects that meet most, if not all, of their criteria and will be willing to pay more."

He expects the median per square foot for new condominium launches to begin from S$2,000, regardless of location.

Mr Eugene Lim, key executive officer of ERA, said that although property prices appear to have stabilised with moderating price growth, prices will still rise as more new launches hit the market.

"Rising land and construction costs are likely to continue pushing new launch prices upwards. When this happens, resale prices also follow," he said.

But despite the high interest rate environment and somewhat uncertain global economic landscape, buyers continue to display a keen interest in new homes, he added. The interest is buoyed by strong Singapore economic fundamentals, low unemployment rates, healthy household savings ratios, and more recently, the improving business sentiments for the second half of 2023.

"For now, some home buyers may take a longer time to view and compare different properties as there are many options in the market. Although some fatigue may have surfaced due to the sheer number of project launches his year, home buyer interest remains resilient," he said.

A separate report on property buyer sentiment by PropNex on Monday said that about 56 per cent of respondents in a survey indicated that they do not intend to defer buying a property in 2023, while 44 per cent said they would put their purchase decision on hold.

Among the deferrers, about half cited high property prices as a deterrent. Two other top reasons are elevated interest rates and the impact of property cooling measures.

About 51 per cent of the respondents also said they prefer a new launch condominium or new executive condominium. A majority of the respondents – 84 per cent – believe that the value of new condominium units will generally appreciate at a faster pace compared with that of older resale properties over time.

The survey polled more than 450 prospective home buyers who attended the company’s Property Wealth System masterclass in April.

CEO of PropNex Ismail Gafoor said that home buyers by and large are still price sensitive, with 36 per cent of respondents citing a housing budget of S$1 million to S$1.5 million. About a quarter (24 per cent) of respondents were comfortable with homes priced in the range of S$1.5 million to S$2 million.

“We saw a more measured price movement in Q2 2023, as the collective impact of various rounds of cooling measures and high interest rates continue to work through the market. This paves the way for more sustainable pricing and will ultimately benefit the consumers," he said.