Press Release

January 27, 2023

Q4 2022 Quarterly Home Price Growth Momentum Eased To Slowest Pace In More Than 2 Years; Quarterly New Home Sales Hit Decades Low

 27 January 2023, SINGAPORE – The growth momentum of home prices eased to the slowest pace in more than 2 years in Q4 2022, as a combination of fresh cooling measures implemented in September 2022, elevated interest rates, depleted supply of new private housing stock, and post-pandemic revenge travel weighed on home sales in the quarter. New home sales volume (ex. EC) in Q4 2022 also hit a 14-year low – the 690 units transacted is the lowest since Q4 2008 where 419 units were sold.

Q4 2022 Private Residential Property Index
Figures from the Urban Redevelopment Authority (URA) showed that overall private home prices rose at a slower pace in Q4 2022, inching up by 0.4% QOQ – following a 3.8% growth in the previous quarter. The final print is slightly higher than the flash estimates (+0.2% QOQ) released earlier this month.

Q4’s price increase is the slowest quarterly growth since Q2 2020 where prices rose by 0.3% QOQ. For the whole of 2022, private home prices increased by 8.6% from the end of 2021, marking the 6th straight annual growth in prices from 2017. The price growth in 2022 is within PropNex’s expectations. With an index reading of 188.6, the URA PPI is at a new record high.

The Landed private homes segment led the price growth in Q4 2022, with prices rising by 0.6% QOQ and posting the 6th straight quarter of increase. For the full year 2022, private landed home prices climbed by 9.6% - marking the 5th consecutive year of price growth - further building on the 13.3% price increase in 2021. Landed homes are among the most coveted real estate properties in Singapore, owing to their scarcity and exclusivity. The uplift in prices has been supported by demand for larger homes and the relatively limited stock of landed homes on the market.

Meanwhile, prices of non-landed private homes inched up by 0.3% QOQ during the quarter, slowing substantially from the 4.4% increase achieved in Q3 2022, as a dearth of new project launches and the seasonal lull put a drag on the market.

By sub-markets, the Rest of Central Region (RCR) posted the fastest price growth in Q4, with home prices climbing by 3.1% QOQ, after rising by 2.8% in the previous quarter. Riviere was the best-selling RCR project (46 units) in Q4 2022, achieving a higher average unit selling price from Q3 to Q4 at $2,994 psf from $2,890 psf.

Meanwhile, Core Central Region (CCR) non-landed home prices rose at a slower pace of 0.7% QOQ in Q4, compared to the 2.3% QOQ growth in Q3 2022. Perfect Ten was the top-selling project, transacting 58 units at an average price of $3,013 psf – up by about 2% from $2,956 psf in the previous quarter.

Home prices in Outside Central Region (OCR) declined by 2.6% QOQ in Q4, following a strong 7.5% increase in Q3. The lack of new major launches (ex. EC) in this sub-market in Q4 has dent price growth, particularly since several new launches (Amo Residence, Lentor Modern, and Sky Eden @ Bedok) had helped to spur price increase in the previous quarter. The most popular new launch project in OCR during the quarter was Lentor Modern which sold 21 units at an average price of $2,129 psf, relatively on par with $2,124 psf in Q3.

In terms of sales volume, developers sold 690 new private homes (ex. EC) in Q4 – marking a sharp 68.4% drop from 2,187 transacted in Q3 2022; it is also the lowest quarterly sales figure since 419 units were transacted in Q4 2008. In Q4 2022, developers launched just 504 new private homes (ex. EC) for sale, compared to 1,455 units in the previous quarter. For the whole of 2022, 7,099 new homes (ex. EC) were sold - down by 45.5% from 2021 and is the lowest annual developers’ sales since 2008. This comes as the number of units launched fell from 10,496 units (ex. EC) in 2021 to 4,528 units in 2022.

Meanwhile, the resale market activity also moderated, with transactions falling by 27.6% QOQ to 2,694 units. For the full year, 14,026 resale private homes were sold – sharply lower than the 19,962 units resold in 2022, but higher than the 5-year average (2017-2021) of 13,338 units.

The private home leasing market continued to strengthen, with rentals rising by 7.4% QOQ in Q4 2022, taking the full year rental increase to 29.7% from end-2021. With 19,291 new private homes (incl. EC) due to be completed in 2023, they may possibly bolster rental stock and could help to bring about a slower pace of rental growth in 2023.

Ismail Gafoor, CEO of PropNex Realty:
“In 2022, we saw many of the new launches booking strong sales - indicative of the still healthy housing demand – that have helped to boost private home prices. However, the price growth momentum lost steam in Q4 2022 owing to the lack of major new launches (ex. EC), the fast depleting unsold inventory, and the year-end market lull. The cooling measures introduced at the end of September 2022, probably also caused some would-be buyers to temporarily postpone their decision to buy a property as they review the changes.

The limited unsold new private home stock on the market was apparent as resale transactions accounted for more than 75% of the total sales (ex. EC) in Q4 2022 – the highest proportion on record since 2004. Buyers who were unable to find a suitable unit in the primary market likely went for resale private homes, where prices have been rising a slower pace compared to new launches. According to URA’s figures, the number of unsold private homes (ex. EC), including yet-to-launch projects was 16,024 units as at Q4 2022 - up by 2.2% from the previous quarter (15,677 units).

We think the decade’s low new private home sales of 690 units in Q4 2022 will likely be a blip and sales should recover this quarter because of new launches coming on the market. In fact, the developers’ sales market already hit the ground running in 2023, with Sceneca Residence in Tanah Merah selling 60% of its total 268 units at an average price of $2,072 psf during its launch – a price-point which many buyers have come to accept as a new normal for mass market launches in attractive locations.

In view of the larger pipeline of launches this year, there are good opportunities for first-timer buyers and HDB upgraders to enter the market. Some of the upcoming launches in February include Gems Ville, Terra Hill, The Botany at Dairy Farm, and Blossoms by the Park, which will provide more housing options in the RCR and OCR. We expect some 40 projects may be launched in 2023, potentially injecting about 12,000 new units (including EC) into the market.

In 2023, we anticipate that home prices in the CCR and RCR could possibly grow slightly faster than that of OCR as more new residential projects come on in the city and city fringe. We are not projecting any downward correction in prices at this juncture in view of the pent-up demand as well as the high land cost and rising construction cost faced by developers. We expect overall private home prices may rise by 5% to 6% in 2023, easing from the 8.6% increase in 2022.”

Q4 2022 HDB Resale Price Index
The latest data released by the Housing and Development Board (HDB) showed that resale prices of public housing flats rose by 2.3% QOQ in Q4 2022 – slowing from the 2.6% growth in Q3 2022. This figure came in slightly higher than the flash estimates (+2.1% QOQ) released on 3 January. Factoring in Q4’s price increase, the HDB resale price index has risen by 10.4% for the whole of 2022 from the end of 2021, representing the 4th straight annual increase from 2019. This is a slower pace of growth compared to the 12.7% increase in 2021.

In Q4 2022, 6,597 resale HDB flats were transacted - down from the 7,546 flats resold in the previous quarter. All in, the resale flat volume reached 27,896 units in 2022, moderating by 10.1% from 31,017 flats in 2021.

Wong Siew Ying, Head of Research and Content, PropNex Realty:
“HDB resale prices rose by 2.3% QOQ in Q4 2022, representing the slowest pace of quarterly price growth since Q3 2020. The slowdown could be due to a combination of factors, including the fresh cooling measures introduced in September 2022 to the muted market activity due to the seasonal lull. In addition, market observations suggest that the stock of HDB resale flats available for sale remain limited amid steady demand for them.

The affordability of HDB flats has been under the spotlight of late following two years of double-digit increase in resale flat prices (in 2021 and 2022). Therefore, the slower price growth in Q4 2022 would likely be welcomed by many Singaporean households who are concerned about the rising cost of home ownership. The spike in the number of HDB resale flats sold for at least $1 million in 2022 to 370 units from 259 flats in the previous year also played a part in fuelling concerns over housing affordability. To set the number in context, the 370 flats accounted for just 1.38% of total HDB resale transactions last year.

In 2023, we anticipate that HDB resale prices could rise by between 6% and 8% - easing from 10.4% in 2022 - in view of the cooling measures, downbeat global economic outlook, high interest rates, and buyers resisting paying ever higher prices for resale units. Meanwhile, demand for HDB resale flats is expected to remain stable in 2023 and we project that some 27,000 to 28,000 flats could be resold this year – relatively on par with 2022.”

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