Private Home Prices Gain Traction, While HDB Resale Prices Off To A Slower Start In Q1 2023

SINGAPORE, 03 April 2023 – Private home prices gained traction in Q1 2023, booking a sharper increase compared to the previous quarter, while HDB resale prices remained resilient but saw a slower price growth over the same period, amid persistently high interest rates and the cautious market sentiment.

Q1 2023 Private Residential Property Index (Flash Estimates)
The flash estimates from the Urban Redevelopment Authority (URA) showed that despite a slower sales volume, overall private home prices rose by 3.2% QOQ in Q1 2023 – accelerating from the 0.4% growth in the previous quarter. The flash estimates have been compiled based on transactions up till mid-March. The final print will be released at the end of the month. According to the URA, private residential sales volume (up to mid-March) came up to 3,309 in Q1 2023, compared to 3,588 in Q4 2022 and 5,343 in Q1 2022.

The Landed private home prices led the price growth in Q1 2023, jumping by 5.7% QOQ in Q1 2023 - significantly higher than the 0.6% increase achieved in Q4 2022. The URA Realis caveat data showed that median unit prices rose in every segment of landed homes QOQ. In Q1 2023 (till 26 March), 304 landed homes were sold, compared to 339 in Q4 2022. Detached house saw the steepest jump with the median unit price rising by nearly 13% QOQ to $1,782 psf supported by higher sales volume, while that of semi-detached house and terrace house increased by about 9% (to $1,570 psf) and 5% (to $1,802 psf) QOQ respectively in Q1 2023.

Meanwhile, in the non-landed private homes segment, prices rose by 2.5% QOQ – up from the 0.3% increase in the previous quarter. Prices of non-landed private homes continued to rise, supported by the boost in transaction volume and firm prices of new launches, as well as the gradual growth in resale prices during the quarter. The new projects that were launched in Q1 2023 included Sceneca Residence and The Botany at Dairy Farm in the Outside Central Region (OCR), and Terra Hill in the Rest of Central Region (RCR).

The Rest of Central Region drove price growth within the non-landed private homes segment in Q1 2023.

- Rest of Central Region (RCR) – The RCR booked a price gain of 4.0% QOQ in Q1 2023, supported by the launch of Terra Hill in Pasir Panjang, which sold more than one-third of its total 270 units at a median price of $2,699 psf in Q1. Existing RCR projects such as Liv @ MB ($2,584 psf), One Pearl Bank ($2,704 psf), Riviere ($3,102 psf), The Landmark ($2,598 psf), and The Reef at King’s Dock ($2,584 psf) also achieved higher median unit prices, with price growth ranging from 1.6% to 6.9% QOQ in Q1 2023.

- Outside Central Region (OCR) – Non-landed home prices in the OCR rose by 1.9% QOQ, overturning the 2.6% decline in the previous quarter. Mass market home prices likely got a boost from the two new projects launched in the quarter. Sceneca Residence in Tanah Merah sold about 59% of its 268 units at a median price of $2,083 psf, while The Botany at Dairy Farm nearly half of 386 units at a median price of $2,065 psf. Some existing OCR projects also fetched marginally higher prices Q1 2023, including The Commodore ($1,497 psf), The Gazania ($2,343 psf), and The Watergardens at Canberra ($1,498 psf) which achieved a median unit price growth of between 0.7% and 1.2% QOQ in Q1 2023.

- Core Central Region (CCR) – CCR non-landed home prices rose at a slightly faster pace, rising by 1.0% QOQ in Q1, compared to the 0.7% QOQ growth in the previous quarter. The larger proportion of CCR new non-landed private homes sold during quarter has likely helped to prop up prices in this sub-market. Based on URA Realis data, developers sold 492 non-landed new homes in the CCR in Q1 (till March 26), compared to 250 and 436 in the RCR and OCR respectively. Notably, several CCR projects on the primary market also posted higher median transacted unit prices in Q1 2023 compared to Q4 2022, such as Leedon Green ($2,945 psf), Hyll on Holland ($2,834 psf), Midtown Modern ($2,888 psf), Perfect Ten ($3,193 psf), and Pullman Residences Newton ($3,188 psf) where median unit prices rose by between 1.9% and 6.6% QOQ.

Based on caveats lodged up till 26 March, developers sold 1,178 new non-landed private homes (ex. EC) in Q1 2023, with The Botany at Dairy Farm, Sceneca Residence and Terra Hill leading sales in the quarter. This is up from the 660 units new non-landed private homes (ex. EC) sold in Q4 2022, owing to a lack of private residential project launches. Following the three new launches, Pullman Residences Newton was the next best-selling project in Q1 2023, transacting 55 units at a median price of $3,188 psf. Over in the non-landed resale private homes segment, 1,962 units were transacted, down by about 19% QOQ from 2,415 units resold in Q4 2022, according to caveats lodged.

Ismail Gafoor, CEO of PropNex Realty:
“Private home prices rose stronger than expected by 3.2% QOQ in Q1 2023 after a muted 0.4% increase in Q4 2022. The recovery in new home sales in Q1 amid more launches, firm prices of new homes, steady sales at CCR projects as some buyers swooped in on value-buys, the gradual uptick in resale condo prices, and stronger landed home prices have all contributed to the higher PPI in Q1 2023. The Q1 2023 price growth has surprised on the upside and we anticipate prices could see a more measured increase in the next few quarters as uncertainties still abound in the market, from the high interest rates to geopolitical tensions and slower global economic growth.

Overall private home prices have been rising for six straight years from 2017 to 2022. In particular, private home prices grew more strongly in the last two years, at 8.6% in 2022 and 10.6% in 2021, as robust housing demand and a supply crunch pushed prices higher. As prices touched new highs and interest rates continue to climb, buyers are likely to take more time to deliberate on their home purchase decision.

Since the introduction of fresh cooling measures in September 2022, coupled with high interest rates, the market is finding its footing and we think there will be more clarity in the next 9 months, with the US Federal Reserve having announced a small rate hike of 0.25% in March and appearing to take a less assertive rhetoric on its monetary policy outlook amid banking turmoil in the US. There are still genuine buyers in the market who are taking a long-term view on their property purchase and are looking beyond the current challenges.

In view of the stronger price growth in Q1, we are raising our forecast upwards slightly. For the full-year 2023, we expect private home prices to rise by 6% to 8%, barring any unforeseen events in the market. Given the boost in the supply of new launches this year, we project developers to sell 8,000 to 9,000 new units (ex. EC) this year – higher than the 7,099 units shifted in 2022.”

Q1 2023 HDB Resale Price Index (Flash Estimates)
The flash estimates released by the Housing and Development Board (HDB) showed that resale prices of public housing flats rose by 0.9% QOQ in Q1 2023 – slowing markedly from the 2.3% growth in Q4 2022. While this marks the 12th straight QOQ growth in the HDB Resale Price Index, it is also the slowest pace of price increase since the 0.3% growth posted in Q2 2020. The HDB added that 6,880 resale flats have been transacted in Q1 2023 (till 30 March) – this is higher than the 6,597 flats resold in the previous quarter.

Wong Siew Ying, Head of Research and Content, PropNex Realty:
“HDB resale prices are off to a slower start in 2023. The growth in HDB resale prices continued to ease in Q1 2023, inching up by 0.9% QOQ - further slowing from the 2.3% increase in the previous quarter. The tightening of loan requirements – 3% interest rate floor and lowered LTV to 80% for HDB loans – and the introduction of the 15-month wait-out period in September 2022’s package of cooling measures likely led to a more subdued price growth in Q1 2023. The measures affected the loan amount that buyers can obtain while the 15-month wait-out period has the effect of crimping demand for resale flats from those who have sold their private home.

After two years of double-digit price growth, price resistance is also setting in as buyers weigh their options. To make public housing more affordable, the government has recently increase the CPF Housing Grant amount for eligible first-timer buyers who can receive up to $190,000 in grants to help fund their resale flat purchase. Buyers of four-room and smaller flats will receive the most grants and we expect enquiries for such resale flats to pick up as buyers look to tap the higher grant. We anticipate the more generous grant may also encourage more buyers to explore options in the resale market.

We believe the overall demand for HDB resale flats will remain healthy in 2023, with the full year resale volume potentially exceeding 28,000 units – higher than the 27,896 resold in 2022. The demand will be underpinned by buyers who need move-in ready flats, and those who are not eligible to purchase a build-to-order (BTO) flat from the HDB directly – such as Singapore Permanent Resident families and high-income singles. In addition, buyers who are seeking larger flats in mature estates, will likely look for options in the resale market, where such units are more plentiful compared to BTO offerings.

Despite the cooling measures in September 2022 to rein in the sales of the so-called million-dollar resale flats, their numbers remained elevated. In Q1 2023, 103 resale flats were resold for at least $1 million, compared to 92 units in the previous quarter, transaction data showed. However, it is lower than the 111 million-dollar flats resold in Q3 2022. In Q1 2023, the 103 million-dollar resale flats accounted for about 1.5% of the quarter’s total transactions.

PropNex projects HDB resale prices could grow by a more moderate and sustainable pace of around 5% to 6% for the full year 2023.”