Home Sales Volume Will Pick Up In 2024: PropNex Deputy CEO Kelvin Fong

The residential property market could be one to watch this year. With prices climbing higher in recent years, where does it leave buyers and sellers, and is it still an opportune time to buy a property in today’s market? PropNex Picks posed these questions and more to PropNex deputy CEO, Kelvin Fong. Read on to find out how to navigate the uncertainties and assess opportunities in the housing market.  

1.      The market had expected that 2023 would be slower than 2022. How has this year pan out for you and what do you think were the key ups and downs this year?

KELVIN: Indeed, transaction volumes have slowed in 2023 and I would attribute it mainly to heightened caution in the market where buyers are wary of the high interest rates, and watching where prices are heading, following the past two years of healthy price growth. The global economic growth outlook is also soft, and there are geopolitical tensions which resulted in uncertainties in the market.

Against this backdrop, we saw a bit of a pullback from buyers, they are becoming more careful. Meanwhile, among the HDB upgraders, some may be fearful about taking that step up to buying a private home as they are concerned about the firm home prices and high loan instalments. These behaviours are not unexpected when the market sentiment moderates.

We all know that not all projects are created equal and this was on full display in 2023. I would say it is one of the highlights of the year. Projects that did very well (e.g. Blossoms by the Park, The Reserve Residences, and J’den) share a number of common attributes: they are strategically-located; they are either a mixed-development or integrated development; near or connected to the MRT station; good range of amenities nearby; proximity to commercial hub; and have a potential “growth story” in the future. These are compelling factors that buyers go for today, and they may not even mind paying a benchmark price for the property because of its long-term potential and location attributes which gave them the confidence to enter the market.

2.       Looking into 2024, what is your take on where sales volumes and home prices are headed? Which segments (CCR, RCR, and OCR / new or resale) would provide more opportunities, and why?

KELVIN: I reckon sales in the first half of 2024 could remain slightly muted as some of the uncertainties we have witnessed in 2023 persist into the new year. However, I am confident that the market will pick up and sales will improve in the second half of the year. That is because there are some expectations that interest rates could start to moderate from June onwards and the Monetary Authority of Singapore has also said that the Singapore economy is projected to improve in the second half of 2024. So, there are some bright spots ahead.

Another reason I am optimistic about sales picking up is that we will have more launches in 2024. In fact, in Q1 2024 alone, we may potentially see more than 10 projects being put on the market. They include Hillhaven, Arcady @ Boon Keng, Lumina Grand (EC), Lentoria, Lentor Mansion, Sora, Marina View Residences, Newport Residences, The Hillshore, and The Hill @ One North.

The project line-up for 2024 spread across the Core Central Region (CCR), Rest of Central Region (RCR), and the Outside Central Region (OCR). I would say there will be ample buying opportunities for those who are looking for a property. It depends on the needs of the buyers and I would encourage prospective buyers to contact our salespersons to find out more about the upcoming launches and discuss which one could be a suitable project for them, based on their needs, objectives, and budget.

As for overall home prices, my view is that we should still see a small price growth in 2024, but prices could be a bit more stable in the first half of the year. This could be a good opportunity for buyers and upgraders to check out the market.

For those looking for immediate occupation, I believe resale homes in the RCR and OCR will still be the main segments as prices are relatively more affordable. Otherwise, buyers and investors can also opt for new launches, which may help ease cashflow owing to the Progressive Payment Scheme. We expect developers to price units sensitively to try to drive the take-up rate at launch; so, there may be some buying opportunities as well. 

3.       Sales appear to have tapered in the last few months of 2023. What do you think are the main reasons for this; is there a lack of confidence in the market? What should buyers and sellers consider in today’s market?

KELVIN: The tentative market sentiment and hesitancy on buyers’ part were largely responsible for the slower sales in 2023, as discussed earlier. Generally, I believe people still have faith in the Singapore property market, but at this juncture they are being more careful due to the uncertainties, and also the elevated interest rates.

Many buyers, investors, and sellers today are quite savvy. They are aware that demand and supply dynamics will have an impact on prices; which brings me to my next point - most people will only buy when the interest rates are low and prices are low. Would this not then create a surge in demand, which will push prices up? Interestingly, it is the herd mentality at work. People are very quick to buy when they see everyone buying, but this is also the time prices start to rise. For instance, we saw the URA property price index (PPI) climbing towards the end of 2020, and into 2021 when the sales volumes picked up (see Chart 1). That was also the time when interest rates were low, before they started to increase after mid-2022.    

                Chart 1: New private home sales and resales and URA PPI                  
Source: PropNex Research, URA

The question to consider is this: when everything is rosy, positive, and people are buying, will price be high or low? To me, when the market is unstable, I believe it presents opportunities to buy or upgrade. Be mindful that interest rates will not stay high perpetually, and there may even be a chance for rates to fall in the later part of 2024. A case in point, fixed-rate home loans shot up to more than 4% p.a. last year, and they have now come down around 2.9% p.a.

The US Federal Reserve has lately taken the tone of keeping rates steady as at December 2023. And some analysts have projected that interest rates could fall in the second half of 2024. Assuming that happens, do you think more buyers will enter the market to buy homes? I think so, and that may put some upside pressure on prices.

Therefore, my advice to buyers is to start doing research and to gain a better understanding of the price trends, and also their own financial position. When they are well-prepared, they are better able to act when a buying opportunity comes.

Perhaps an example worthy of a mention is the Covid-19 pandemic. Some people are worried, they thought prices would drop and stayed away from the market. But prices actually went up, and the buyers who attended our webinars and took an action are likely sitting on a decent profit today.

4.       You were appointed as the Deputy CEO in August 2023. Could you share with us some key plans to drive PropNex’s business and to further grow its market share? 

KELVIN: One of our key objectives in 2024 is to continue to add value to our clients, and our salespersons. Consumer education will be a key plank, we will have more events and outreach efforts to raise awareness about financial literacy and building capital via real estate, as well as to help consumers on their homeownership or property investment journey. Some of our key events include the popular Property Wealth System (PWS) masterclass, Singapore Property Expo, and our Property Frontrunners seminars.

We will also be building up more in-house technology and artificial intelligence capabilities to help our salespeople connect with their clients more efficiently and effectively. We see technology as a big business enabler and will continue to focus our efforts on driving it.

In 2023, we have also promoted five key PropNex leaders to the roles of Agency Vice President (AVP). With the five AVPs, we have curated a host of high-quality training sessions and activities to equip our agents with market-proven strategies to help them accelerate success.

It will be an exciting year and I am sure PropNex will continue to lead on multiple fronts, be it market share, consumer engagement, thought leadership, or salesforce development.     

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