Price increase slowed as sales plunged
Against the headwinds of weakening global economy, rising interest rates, persistent inflation, fresh round of cooling measures and a dearth of new launches, 2022Q4 turned in the smallest price increase since 2020Q1 and the lowest home sales volume since 2016Q1.
The URA private residential price index inched up by a mere 0.4% q-o-q, a stark contrast to the 3.8% and 3.5% rise in preceding two quarters. For the whole year, the price index rose by 8.6%, slowing down from the 10.6% rise in 2021.
By property types, the price index of landed homes rose by 0.6% q-o-q while the index of non-landed homes rose by 0.3% over the same period. For the whole year, prices of landed homes rose by 9.6%, slower than the 13.3% growth in 2021. As for non-landed homes, prices gained 8.1% in 2022, compared to the 9.8% gain in 2021.
With the absence of mega new projects to set pricing and stimulate sales in 2022Q4, prices of non-landed homes in Outside Central Region (OCR) suffered the biggest contraction of 2.6% q-o-q. However, prices of non-landed homes in the Core Central Region (CCR) and Rest of Central Region (RCR) registered positive growth of 0.7% and 3.1% q-o-q respectively. For the whole of 2022, prices in CCR, RCR and OCR gained 4.8%, 9.7% and 9.3% respectively. Back in 2021, the respective price gains in the three regions were 2.7%, 16.3% and 8.8% y-o-y. In both years, the RCR turned out to be the best performer.
A total transaction of 3,588 homes were sold in 2022Q4, much lower than the 6,148 and 6,811 units sold in Q3 and Q2 of 2022. The main drag was new homes, which numbered only 690 units, the lowest quarterly sales volume since 2008Q1 when there were only 419 new sales. In total, 21,890 homes were sold in the whole 2022, compared to 33,557 homes sold in 2021.
CYCLES OF THE URA RESIDENTIAL PRICE INDEX
As more dark clouds gathered on the economy, home buyers, sellers and developers all took a cautious stance in 2022Q4. Developers launched only 504 new homes for sale, comprising mostly the remaining units of existing projects. There were four new project launches of smaller scale: Hill House (72 units), Kovan Jewel (34 units), Pollen Collection (132 landed units) and Sophia Regency (38 units). Response to these new projects seemed lukewarm probably because they are targeted at a niche market rather than at the masses.
The best performing project in 2022Q4 was Perfect Ten, with 58 units sold, followed by Riviere with 46 units sold and Leedon Green with 33 units sold. In total 690 new homes were sold, much lower than the 2,187 new homes sold in 2022Q3. Of the 690 units sold, 381 units (55%) were from projects in CCR and 186 units (27%) from those in RCR. Only 123 units (18%) were in OCR as most of the projects were close to being sold out.
For the whole year, developers launched 4,528 new homes for sale and sold 7,099 units. These were way below the 10,496 units launched and 13,027 units sold in 2021 when the market was more upbeat.
Due to the lack of new supply in OCR, buyers turned to the resale market. The 2,694 resale transactions in 2022Q4 comprised 1,472 units (55%) in OCR, 728 units (27%) in RCR and 494 units (18%) in CCR. In comparison, 3,719 resale homes were sold in 2022Q3.
As at the end of 2022, 14,026 resale homes were sold, 30% below the resale volume of 19,962 homes in 2021. The decline in resale transactions could be attributed to rising prices, higher borrowing costs and the 15-month wait-out period imposed on private home owners before they could buy a non-subsidized resale HDB flat.
The slowdown in sales volume was also reflected in the HDB resale market. Buyers showed a greater resistance to the higher prices,as their financing is being crimped by the tighter loan-to-value limit in the latest cooling measures as well as the rising interest rates.
Including subsales, a total of 3,588 private homes were sold in 2022Q4. This brings the full year sales volume to 21,890 homes, some 35% lower than the 33,557 homes sold in 2021.
Caveat data provided by URA showed that 77% of the homes were bought by Singaporeans, down from 80% in the preceding two years. Singapore permanent residents bought around 18% of the properties, compared to 16% and 15% in 2021 and 2020 respectively. The proportion bought by foreigners remained at 4%, consistent with the previous two years. The top five foreign buyers came from China, Malaysia, India, USA and Indonesia.
Some 98 luxury homes were sold in 2022Q4, down from the 153 deals in 2022Q3. For the whole of 2022, there was a total of 518 transactions. The most expensive property sold in each segment in the year was a GCB at Chancery Lane which fetched $66.06mil, a villa at Ocean Drive which fetched $34.50 mil and a penthouse at Les Maisons Nassim sold for $68.00 mil.
PROJECTS THAT SOLD WELL IN 2022Q4
HOMES SALES VOLUME
LUXURY SALES VOLUME (New & Resale)
The rental market continued its red-hot state in 2022Q4 as the economy reopened to allow more business and leisure travel as well as the hiring of more foreign talent. As demand outstripped supply, landlords seized the opportunity to raise rents to offset higher mortgage costs and property taxes. The URA rental index climbed 7.4% q-o-q, following an 8.6% q-o-q rise in 2022Q3. For the whole year, the index chalked up 29.7%, surpassing the 9.9% rise in 2021. This is the highest annual y-o-y increase since 2008Q1 when it rose by 39.2%.
In 2022Q4, the rents of non-landed homes climbed 7.5% q-o-q while those of landed homes rose by 6.3%. Through the year, the rental index of non-landed homes gained a total of 29.8% followed closely by the landed rental index which rose 28.1%.
By regions, the OCR non-landed rental market was the best performer, rising 8.2% q-o-q and 31.8% y-o-y. The rental index of non-landed homes in both RCR and CCR rose by 7.3% q-o-q in 220Q4, but for the whole year, the RCR index gained 30.3% while the CCR index gained 28.2%. Based on URA’s rental data for 2022, the highest rent of $150,000/month was fetched a bungalow at Dalvey Road and another at Fourth Avenue. In the non-landed segment, the record rental deals were $100,000/month for a four-bedroom apartment at The Marq (CCR), $36,000/month for a penthouse at MeyerHouse (RCR) and $16,500/month for a penthouse at Grand Duchess At St Patrick’s.
A total of 4,423 new homes were completed in 2022Q4, the highest number since 2018Q4. The big projects completed in the quarter were Jadescape (1,206 units), The Tre Ver (729 units), Fourth Avenue Residences (476 units) and Daintree Residence (327 units). The total residential stock stood at 391,198 units at end-2022.
The high completion number will help to free up more housing to meet rental demand as more families move into their new homes in the next few months. Vacant units eased slightly to 21,647 from 21,898 in 2022Q3 which was also reflected in a drop of 20 bps in the vacancy rate to 5.5% from 5.7% in 2022Q3.
Supply in the pipeline
As at the end of 2022Q4, there was a total of 46,041 uncompleted private homes in the pipeline with planning approvals, down from 49,384 units in 2022Q3. Of this number, 16,024 units (35%) were unsold, slightly higher than the 15,677 units at end-September. The 16,024 unsold units comprised 5,496 units (34%) from projects that were either launched or not launched yet and 10,528 units (66%) from projects without the prerequisites for sale.
In 2022Q4, two residential sites from the government land sales (GLS) programme were successfully sold. The first is a 49,633 sq ft site at Bukit Timah Link close to Beauty World MRT Station. The top bidder, Bukit One, clinched the site with a bid of $200 mil or $1,343 psf/plot ratio. The second site at Hillview Rise was awarded to the joint venture of Far East Civil Engineering and Sekisui House at $320.78 mil or $1,024 psf/plot ratio.
Separately, a 16,379 sq ft site at Pasir Panjang Road was sold to boutique developer Silver Edge Investments for $18.48 mil or $1,128 psf/plot ratio.
The first half of 2023 is expected to move slowly as uncertainties persist in the global economy with regards to the impact of rising interest rates and the ongoing war in Ukraine. Hopefully, China’s re-opening could pave the way for rebound in activity in 2023H2.
For now, Singapore’s stable political environment and pro-business policies will continue to attract foreign investors to our shoes. This will help to boost residential demand. With a stronger pipeline of new projects to offer to potential homebuyers, demand for new homes could improve to 8,000-9,000 units. We expect a moderate rise of 1-3% in home prices.
Developers will continue land-banking activities, participating more in GLS programme while being more measured and selective in buying private sites via collective sales.