Singapore’s housing prices increased at their lowest quarterly rate in almost three year as home sales decreased, the supply increased, and rents continued to fall in the first half of 2024.

Analysts said that downward pressure is likely to continue on the private residential sector in the coming months as both home-buying and rent demand will moderate amid economic uncertainties.

Urban Redevelopment Authority figures released on Friday (26 Apr) show that private residential property prices rose by 1.4% in the first three months of 2024. This was just a little lower than the flash estimate of 1.5 per cent by the agency earlier in the month. This followed an increase of 2.8% the previous quarter.

The quarterly rise of 1.4% is the lowest since Q3 2020, when it was only 1.1%.

Rents declined by 1.9 per cent during Q1, extending a decline of 2.1 per cent from the prior quarter.

The slower growth in prices reflects a cautious attitude of homebuyers to high price levels, given the slower wage growth as well as the softer economic conditions.

Prices of private homes have risen by 34,3% since the Covid pandemic.

In the face of higher interest rates as well as the additional 60 per cent stamp duty (ABSD) that foreigners will pay starting late April 20,23, there has been a marked increase in resistance to price increases. In 2023, developers sold 6,421 homes, the lowest number in 15 years.

Unsold inventory (excluding ECs), jumped 17.8 % in Q1 to 19936 units from 16,929 in Q4 2023. Unsold inventories, including completed units, rose 17 per cent in Q1 to 20,204 units.

The first quarter of 2024 saw a rise in home values led by landed properties, which rose 2.6% from 4.6% in the previous period.

Prices of non landed properties increased by only 1% in Q1, down from a 2.3% rise in the prior quarter.

Prime Core Central Region prices (CCR) accounted for the price increases in Q1, which rose 3.4%. The Rest of Central Region (RCR) and Outside Central Region (OCR) saw a modest gain of 0.3% each.

The public launch in CCR of Watten House appeared to boost sentiment, as existing projects such Perfect Ten and Leedon Green experienced higher median prices.

CCR purchases could help prices catch up with those in other regions. CCR prices rose by only 11 per cent between 2021-2023. That is far behind other regions that have seen prices rise over 30 per cent.

For the third quarter in a row, overall sales volume dropped by 2.4% to 4,230 unit. Sales of resale items fell 5 percent, to 2,689 pieces. Sub-sales also dropped 8.3 percentage points to 377 pieces.

New sales were the only market that showed improvement, with a volume increase of 6.6% to 1,164 unit in Q1. The developers increased the number of private homes available for sale from 1,060 to 1,304, excluding executive condominiums.

Nevertheless, in Q1, the uptake of new products slowed. In Q1, new launches that sold more than 100 units were taken up at a rate of 39 percent, down from 54 percent a year earlier.

It is the lowest number of units sold in Q1 since Q1 2008.

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Developers may also be more conservative with their land bids and pricing new units to make them more affordable to local buyers. In Q1, the median price of non-landed private houses (excluding ECs), excluding ECs, was S$1.96 million. It had been S$2.15 millions in the previous period.

Rents declined by 1.9 percent in Q1, which was a continuation of the 2.1% decline seen in the preceding quarter.

In 2017, the number of private homes completed was 19,968 (excluding ECs), which is higher than 2016’s 20803 units.

In the first three months of the year, 241 units, mainly the 200-unit Meyer Mansion freehold in District 15, were completed. Net completed stock shrank by 188 apartments, likely due to the demolition projects sold for redevelopment.

At the end of Q1, the vacancy rates fell to 6.8 percent from 8.1 percent in Q4.

Based on the estimated completion dates, 10561 private homes (including ECs) are expected to be finished in 2024’s remaining three-quarters. A further 6,316 units should be finished in 2025.

Analysts anticipate that rents are likely to continue to fall in the next few months.

Rents are likely to fall as much as 5 percent this year, given the rise in housing stock and lower numbers of incoming expats.

Rents are likely to stabilize next year as the number of new units completed in 2025-2026 is expected to fall from 13,275 units per decade, on average, to 6,691 units each.

Rents are still 52% above their previous trough, which was in Q3 of 2020. She anticipates CCR rental rates to continue falling with increased vacancy in 2024 and significant completions.

Even so, a healthy pipeline for new project launches will stimulate the market’s activity and demand for homes.