Dec 2023 new home sales weakest in 15 years

Singapore has its surprisingly news that the Dec 2023 new home sales weakest in 15 years.

The Singapore property market witnessed a surprising downturn in December 2023, as new private home sales hit their lowest point in 15 years. This decline was part of a broader trend, making 2023 the weakest year for new home sales since 2008.

Factors Behind the Slump

The drop in sales during December was not entirely unexpected. Developers had been cautious throughout the year, holding back on new project launches due to successive market cooling measures and a subdued buying sentiment. The average take-up rates for new projects, with at least 100 units, within the first month of their launch, also saw a decline from 64 percent in 2021 and 72 percent in 2022 to 55 percent in 2023.

December’s Sales Figures

Data from the Urban Redevelopment Authority (URA) for December 2023 revealed that developers sold only 135 units, excluding executive condominiums (ECs). This marked an 83 percent decrease from the 784 units sold in November 2023 and a 21 percent decline from the 170 units sold in the same month the previous year. The year-end lull, combined with the absence of new project launches, resulted in the lowest monthly sales since January 2009 when only 108 units were transacted.

Annual Sales Performance

For the entirety of 2023, an estimated 6,452 new homes were sold, representing a 9.1 percent decrease compared to the 7,099 sales in 2022 and half the number sold by developers in 2021. This year’s performance also marked the lowest new sales volume recorded in 15 years since 2008 when 4,264 new homes were sold. Several factors contributed to this sales decline, including property cooling measures implemented in April 2023, a lack of project launches, macroeconomic uncertainties, and interest rate hikes.

Dec 2023 new home sales weakest : Regional Trends

In December 2023, new projects in the Outside Central Region (OCR) and Rest of Central Region (RCR) outperformed those in the Core Central Region (CCR). PropNex’s data indicated that the two best-selling projects in the RCR city fringe areas were The Continuum, with 17 units sold at a median price of S$2,775 per square foot (psf), and The Landmark, where 13 units changed hands at S$2,853 psf. In the suburban OCR category, The Myst sold nine units at a median price of S$2,199 psf, and J’den saw seven units sold at a median price of S$2,577 psf. In contrast, the best-selling CCR projects were Midtown Modern and Watten House, each selling six units at median prices of S$2,882 psf and S$3,258 psf, respectively.

Regional Sales Breakdown

Throughout the year, the RCR dominated overall new private home sales, accounting for 47.1 percent (3,040 units) of total sales, followed by the OCR with 30.3 percent (1,953 units) and the CCR with 22.6 percent (1,459 units). While the RCR experienced an 11.3 percent year-on-year increase in new sales volume for 2023, the OCR and CCR saw declines of 21 percent and 23 percent year-on-year, respectively.

Buyer Preferences

Buyers in 2023 showed a preference for properties priced between S$1 million and S$2.5 million, accounting for approximately 72.4 percent of total transactions. Experts attributed this trend to buyers’ caution regarding elevated interest rates. They expect that in 2024, homes priced up to S$2.5 million will continue to be the most sought-after.

Foreign Buyer Trends

Foreign demand for private homes remained subdued, with foreigners accounting for only 3 percent of the monthly sales in December, albeit higher than the 1.8 percent in November. From January to May 2023, there were approximately 235 purchases by foreigners, but this number dropped significantly to 80 transactions from June to December 2023. This decline is due to the higher Additional Buyer’s Stamp Duty (ABSD) on foreign buyers, which doubled from 30 percent to 60 percent in April.

Annual Trends in Foreign Purchases

For the full year, the proportion of new private homes purchased by foreigners, specifically non-permanent residents, decreased from 7.1 percent in 2022 to 5 percent in 2023. URA’s Realis data indicated that there were two non-landed homes at Watten House that transacted for more than S$10 million, with six more sold for at least S$5 million in December 2023.

Outlook for 2024

As we move into 2024, experts have varying opinions on the market’s trajectory. Some anticipate increased sales due to the launch of new projects, while others believe that demand may weaken, particularly among HDB upgraders, due to lower liquidity and smaller budgets.

It is expected that about 20 new projects from awarded government land sales sites will be launched this year, adding approximately 10,000 new units to the market. The expectation is for about 7,000 to 8,000 new private homes to be sold in 2024, an increase from the 6,452 units in 2023 but still below the five-year average. Sentiment could improve in the second half of 2024 if interest rates ease and the economy recovers. It is anticipated that around 3,300 units across 13 projects may be launched for sale in the first quarter of the year.

As long as a buyer continues to focus on high quality projects such as Lentoria, they will reap the benefits of the recovering property market in the years to come. It has always been that case.

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FAQs

Q1: What led to the decline in new home sales in December 2023?
Several factors contributed to the decline in new home sales in December 2023, including cautious developer behavior due to market cooling measures and weak buying sentiment. Additionally, there were no new project launches during the month, and the year-end seasonal lull further impacted sales.

Q2: How did different regions in Singapore perform in terms of new home sales?
In 2023, the Outside Central Region (OCR) and Rest of Central Region (RCR) outperformed the Core Central Region (CCR) in terms of new home sales. The RCR accounted for the highest percentage of total sales, followed by the OCR and CCR. The RCR also experienced a year-on-year increase in new sales volume, while the OCR and CCR saw declines.

Q3: What is the outlook for the Singapore real estate market in 2024?
The outlook for the Singapore real estate market in 2024 varies among experts. Some anticipate increased sales due to the launch of new projects, while others believe that demand may weaken, particularly among HDB upgraders, due to lower liquidity and smaller budgets. Sentiment could improve in the second half of 2024 if interest rates ease and the economy recovers.

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