In a recent report released by the Urban Redevelopment Authority (URA), it was revealed that Singapore’s real estate market witnessed a significant slowdown in September. This month marked the lowest private home sales since December 2022.
This article dives into the reasons behind this decline, explores the demand for Executive Condominiums (ECs), and provides insights into upcoming launches and sales projections for the remainder of the year.
September sees lowest private home sales
In September, a mere 217 units were sold, marking a substantial 44.9% drop from August and an astonishing 78% drop from the same month last year.
This decline brought the total primary home sales for the first nine months of 2023 to 5,407 units – a 15.6% decrease compared to the same period in the previous year.
Notably, this nine-month tally represents the lowest figures since 2016, highlighting the severity of the current market situation.
Read also: “Price pressures expected till end 2023”: HDB resale prices drop for the first time since February
Reasons behind the sales decline
The decline in Singapore’s real estate market in September was influenced by a combination of factors that created a challenging environment for property sales:
Absence of major property launches
One significant factor was the lack of major property launches in the preceding two months. New launches often infuse the market with excitement, drawing in potential buyers eager to explore fresh opportunities.
The absence of such launches created a void, reducing the overall allure of the market.
Cultural observances and school holidays
Furthermore, the timing of the lunar seventh month, also known as the Hungry Ghost festival, and the occurrence of school holidays further dampened market activities. Traditionally, during the lunar seventh month, many individuals observe cultural practices that might deter them from engaging in significant financial transactions, including property purchases.
Similarly, school holidays tend to divert the attention of families, making them less inclined to invest in property during this period.
Cautious buyer sentiment
Additionally, analysts observed that buyer sentiment was cautious and guarded. The prevalent weak economic conditions, combined with ongoing market cooling measures, created an atmosphere of uncertainty among potential buyers.
The government’s measures to stabilise the property market, while necessary for long-term sustainability, had a short-term impact on buyer confidence. The uncertainty was further compounded by elevated interest rates, which made financing less attractive for potential buyers.
Read also: The realities of luxury property investment & why high-end homes don’t always equal high returns
Developer’s dilemma
On the developer’s side, there was a delicate balancing act.
While they were acutely aware of the subdued market sentiment, they refrained from implementing significant price cuts. This cautious approach was influenced by earlier capital outlays made by developers. These financial investments, made in the initial stages of property development, meant that drastic price reductions could severely impact their profit margins.
Consequently, developers chose to maintain stable pricing, waiting for a more opportune moment in the market to make strategic adjustments.
Demand for Executive Condominiums (ECs)
Despite the overall market slowdown, the demand for Executive Condominiums (ECs) remained robust.
Altura, situated in Bukit Batok, emerged as the best-selling project in this category. With a median price of S$1,473 per square foot (psf) in September, Altura set a new benchmark for the EC market.
Notably, a 980 square foot unit within Altura was also sold for an impressive S$1.6 million, equating to an astounding S$1,585 psf. This achievement eclipsed the previous per square foot price high held by Copen Grand, which stood at S$1,499 psf.
The strong demand for ECs can be attributed to price-sensitive buyers seeking an alternative to private homes.
Read reviews for both Altura and Coper Grand here:
Bukit Batok’s first EC in 20 years and within 1km of ACS (Primary) Tengah
First Tengah EC With Efficient Layouts & Luxurious Facilities
Properties for you
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Upcoming launches
Analysts are optimistic about the market, anticipating strong buying interest in upcoming major launches. Projects like Watten House in the prime district and Hillock Green and J’den in the suburbs are expected to invigorate the market.
These launches, coupled with pent-up demand, are anticipated to drive a resurgence in sales in the coming months.
Read also: Upcoming Executive Condo sites in 2023 to 2024: Which New EC should you go for?
Sales projections and property price outlook
Projections for the remainder of 2023 vary among analysts, ranging from 6,000 to 7,000 units. While prices are expected to rise modestly by 1 to 5 percent, market players are adopting a cautious approach due to weak macroeconomic conditions and market cooling measures.
The outcome of these projections hinges on the pace of economic growth and market sentiment. However, developers might defer launches into 2024, waiting for interest rates to stabilise and sentiment to improve amidst ongoing economic challenges.
Wrapping up
Our real estate market faced a challenging period in September, with record-low private home sales.
Despite the slowdown, the demand for ECs and the anticipation of upcoming launches offer glimmers of hope. As the market navigates these uncertainties, both buyers and developers must remain adaptable and vigilant.
The future of Singapore’s property landscape ultimately rests on the delicate balance between economic recovery and market dynamics.
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