Prime District Leads New Private Home Sales Amid Overall Slowdown in 2023
Amid a slowdown in overall demand for new private homes in Singapore in 2023, sales in the prime district have remained robust. Factors contributing to this trend include a lack of new launches in the prime district, narrowing price gaps compared to other regions, and the appeal of prime district properties for high-net-worth individuals.
Key Highlights:
- Prime District Performance: Private homes in the Core Central Region (CCR), or prime district, have seen stronger demand in 2023 compared to the city fringe and suburbs. From January to September 2023, 1,182 new homes were sold in the CCR, outperforming the 505 units launched.
- Overall Slowdown: The overall demand for new homes has slowed in 2023, with expectations of recording the lowest yearly new home sales since 2008. Contributing factors include high-interest rates and property cooling measures introduced in April.
- Yearly Performance: As of November 26, 2023, developers have sold around 6,290 new units, with expectations of total transactions ranging from 6,500 to 7,000 by the end of the year, still below the 7,099 units sold in 2022.
- Factors Impacting Demand: High-interest rates and additional property cooling measures are cited as factors contributing to the subdued demand in 2023. Analysts anticipate the overall new private home sales, excluding executive condominiums, to underperform the previous year.
- Price Gap: The stronger demand for new homes in the prime district is attributed to the narrowing price gap between the CCR and other regions. Prices of new private homes in the suburbs and city fringe have risen at a faster rate than those in the prime district.
- Price Trends: Median prices of new private homes in the prime district rose 18.9% from $2,496 per sq ft (psf) to $2,968 psf from 2020 to the first 11 months of 2023. In comparison, median prices for city fringe homes rose 38.4%, and suburban homes rose from $1,548 psf to $2,113 psf.
- Scarcity of Larger Units: Homes in the prime district are preferred by high-net-worth individuals for wealth preservation, and the scarcity of larger units enhances their appeal.
- Future Supply: Over 30 projects yielding over 10,000 non-landed private homes are expected to enter the market in 2024, according to analysts.
- Price Stability in 2024: Analysts expect overall private home prices to remain relatively stable in 2024, citing increased condo supply in 2023 helping stabilize prices. However, geopolitical tensions, economic headwinds, and high-interest rates may impact housing demand in the first half of 2024.
- Potential Interest Rate Cuts: Analysts are hopeful for interest rate cuts in the second half of 2024, which could provide an additional boost to the new-home market.
The performance of the prime district in the context of overall market trends reflects the interplay of various factors influencing buyer preferences and market dynamics. The anticipated supply in 2024 and potential economic changes will continue to shape the real estate landscape.
