New private home sales in December fall to lowest level since January 2009
SINGAPORE – New private home sales in December sank to lows last seen during the 2008 global financial crisis, as buyers stayed cautious in the face of heightened macroeconomic uncertainty and higher borrowing costs, and as developers held back new launches amid the year-end lull.
Developers’ sales, excluding executive condominiums (ECs), plummeted 82.8 per cent to 135 in December – the lowest monthly sales tally since January 2009 when 108 new units were sold.
On a yearly basis, sales were down 20.6 per cent from 170 units in December 2022. Including ECs, new home sales were down 81 per cent to 152 units.
Ms Chia Siew Chuin, JLL’s head of residential research for Singapore, noted that the average take-up rate of new projects (at least 100 units) in the first month of launch slowed to 55 per cent in 2023, from 72 per cent in 2022.
She cited buyers’ resistance to higher prices amid downbeat macroeconomic conditions, several rounds of cooling measures, elevated interest rates and ample new housing options.
For the whole of 2023, 6,452 new homes, excluding ECs, were sold, representing the lowest annual sales since 2008, when just 4,264 units were transacted, analysts said.
Developers launched just 36 new units for sale in December – a six-month low since June 2023, when 31 units were released – down from 970 units in November.
There are about 40 residential projects lined up for launch in 2024, but only about half may launch in the next 12 months, noted Mr Nicholas Mak, chief research officer at property search portal Mogul.sg.
Even as the slew of upcoming new launches in 2024 could translate into higher developers’ sales, he pointed to several factors pressuring the market.
For one thing, private housing demand from HDB upgraders may weaken as the number of HDB resale transactions with cash-over-valuation (COV) has dropped. This could translate to a smaller housing budget for those upgrading to private properties, he said.
COV is the difference between the sale price of a flat and its actual HDB valuation, which is paid for in cash by the buyer. About 15 per cent of buyers forked out COV for their flats in the fourth quarter of 2023, down from almost 30 per cent in the same period in 2022, National Development Minister Desmond Lee said on Jan 15.
Mr Mak noted that investors’ demand could be hit by further weakness in residential rental rates in 2024. Foreign buyers will also stay sidelined by the doubling of additional buyer’s stamp duty (ABSD) rates to 60 per cent, and despite healthy household balance sheets, local buyers are likely to take more time to commit.
Knight Frank head of research Leonard Tay noted that in 2023, the city fringe sub-market launched the highest number of new units at 4,268 and also scored the highest sales at 3,153 units. This was followed by the suburbs, which saw 2,688 units launched and 1,988 units sold.