(Oct 1): Singapore’s home prices fell for the first time in five quarters as a sales slowdown weighed on the market.
An index of private home prices dropped 1.1% last quarter from the previous three months, according to a preliminary estimate released Tuesday by the Urban Redevelopment Authority. That compares with a 0.9% increase in the second quarter and is the first decline since the second quarter of 2023.
Singapore is on course for its worst year in new home sales since the global financial crisis. Property purchase curbs and high interest rates have deterred buyers.
“Despite recent interest-rate cuts by the US Federal Reserve, domestic mortgage rates are expected to remain elevated relative to the low levels seen over the past decade,” the authority said in a statement. Transaction volumes for private homes, including the second-hand market, fell by about 11% in the third quarter, it estimated.
For months, developers had been resisting price drops and holding back the release of new projects. That has prompted more cautious buyers to turn to comparatively cheaper second-hand private units and government-built public housing instead.
Homebuyers are now “more restrained” due to the high cost of living and interest rates, said Christine Sun, chief researcher and strategist at real estate agency OrangeTee Group.
Demand for public housing led to a gain in values of those properties. A price index for second-hand Housing & Development Board flats was estimated to have risen 2.5% in the third quarter, the largest jump in two years and the 18th consecutive increase.
That’s a growing headache for authorities trying to address public frustration over housing affordability in the run-up to elections. Officials have been releasing the biggest amount of land for private residences in more than a decade, as well as ramping up public housing builds.
Morgan Stanley, which expects private home prices to remain unchanged overall this year, forecasts another 1% drop in the fourth quarter and a 5% decrease next year. Last quarter’s decline was driven by a slide in prices for landed properties and city centre homes, analysts Wilson Ng and Derek Chang wrote in a note on Tuesday. They had earlier said that “conditions are already in place for prices to fall.”
Final figures for changes in home prices will be released toward the end of October.
Source: TheEdge - 2 Oct 2024
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