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  • Writer's pictureDelvin Goh

Singapore Real Estate Market Update: What happened in Q3 2023?

In the ever-evolving landscape of Singapore's real estate market, the third quarter of 2023 brought forth notable shifts and trends. Let's delve into what happened and how we can navigate the next quarter.

Price Trends

The Urban Redevelopment Authority (URA) price index recorded an increase of 2.2% in overall non-landed private market prices during Q3 2023, contrasting sharply with the 0.6% drop witnessed in Q2 2023.

Notably, the surge was primarily propelled by robust price growth in the Outside Central Region (OCR), followed by a reversal of the decline seen in the Rest of Central Region (RCR).

However, prices in the Core Central Region (CCR) experienced a decline of 2.7%, marking a two-quarter downturn, a rare occurrence not seen since Q4 2019 and Q1 2020.

Supply Of New Private Properties

Looking at the available supply of new residential properties, the data indicates a decrease in unsold units from 17,484 to 16,747. Delving deeper into the segmentation across regions, the OCR and RCR continue to exist in a relatively low-supply market.

The inventory in these areas is anticipated to be sold within less than 1.5 years, contrasting starkly with the CCR's healthier supply that would take around 4.8 years to deplete.

However, a surge in supply is expected by the end of 2024 or early 2025, with 9,250 units entering the market due to the Government Land Sales (GLS) programme, making this the highest number of units entering the market in a decade.

Global Tensions And Real Estate Demand

Despite escalating global conflicts in regions like the Middle East and Ukraine, Singapore's real estate demand remains largely resilient due to a large proportion of local buyers.

Singapore's status as a safe haven is tempered by the substantial Additional Buyer's Stamp Duty (ABSD) of 60% for foreign buyers, dissuading significant foreign investment into residential properties. However, potential interest might arise from American citizens, given their similar treatment under ABSD regulations as Singaporeans.

Summarizing Movements In Price Trends

Summarizing these factors to explain the price trends seen in Q3 2023, the longer take-up rate in the CCR, coupled with cooling measures targeting foreign buyers (60% ABSD), continues to restrain price escalation in prime properties.

Additionally, the stance of "higher for longer" interest rates in the US, impacting Singaporean rates, coupled with high internal stress test interest rates for banks (~4.8%) restricts individuals from taking larger loans to finance property purchases.

3 Key Takeaways from Q3 2023

  1. Market Price Growth: With CCR property prices under a price ceiling and external macroeconomic pressures, overall market price growth is expected to decelerate.

  2. Limited OCR and RCR Supply: Buyers eyeing the OCR and RCR regions may continue to face challenges securing preferred units due to limited supply, particularly for smaller-sized units like 1 and 2-bedroom apartments.

  3. CCR Opportunities: Prospective buyers considering entry into the CCR should keep a keen eye for potential bargains amidst relatively high supply and declining prices.

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