Clearing Skies in Singapore’s Prime Residential Market.
Stable Prices and Growing Secondary Market Sales in the Core Central Region (CCR) Indicate an Improving Outlook Post-ABSD Hike
Macroeconomic uncertainties and tightened cooling measures have impacted the high-end residential property sector over the past year.
Since the increase in additional buyer’s stamp duty (ABSD) rates in April 2023, sales of non-landed private homes in the Core Central Region (CCR) have been tepid, especially in the new home sales segment, as some developers delayed launches. The CCR, which includes Districts 9, 10, 11, Sentosa, and the Downtown Core, is often seen as a proxy for the high-end market.
According to URA Realis caveat data, developers sold 248 new non-landed private homes in the CCR in the first nine months of 2024, potentially marking one of the lowest new sales records for this segment. The current record low was in 1998, with 354 units transacted following the 1997 Asian financial crisis.
With favorable market conditions, a pipeline of new launches, and strategic pricing, the outlook may improve. However, the high ABSD rate of 60% for foreigners purchasing residential property and increased ABSD rates for Singaporeans buying their second and subsequent properties will continue to impact private home sales, particularly in the CCR, which appeals to foreigners and investors.
Limited new project launches, high interest rates, and cautious market sentiment have also dampened buying interest throughout 2024. Nonetheless, there are positive signs.
Stable Prices Maintain Market Confidence
Prices of non-landed homes in the CCR have remained stable, rising at a slower pace. Despite several rounds of cooling measures in recent years, CCR prices increased by 3.8% in 2021, 4.8% in 2022, and 1.9% in 2023. In the first nine months of 2024, CCR prices rose by 1.9%, according to the Urban Redevelopment Authority’s property price index. Median prices have reached new highs, with median unit prices of new and resale CCR non-landed homes hitting S$3,246 psf and S$2,103 psf, respectively, in 2024 (up to Sep 30), based on lodged caveats.
The gradual price increase amid falling sales volumes highlights the market's resilience and may indicate strong household liquidity.
CCR Price Growth Lags Behind Other Regions, Narrowing the Price Gap
The price growth of non-landed private homes in the CCR has consistently lagged behind the Rest of Central Region (RCR) and the Outside Central Region (OCR) in recent years. Since the Covid-19 pandemic, CCR non-landed home prices have grown by a cumulative 15.1% from Q1 2020 to Q3 2024, significantly underperforming the 42.2% rise in the RCR and the 40.6% increase in the OCR.
This lag has narrowed the price gap between the CCR and other regions, presenting buying opportunities. For 99-year leasehold non-landed private homes, the median unit price gap between the CCR and RCR fell to 14.6% in 2023 for new sales. In the resale market, the CCR-RCR price gap was 11.2%. Additionally, secondary market sales in the CCR are improving. While new sales in the CCR have been slow, resale volumes have remained steady.
In the year-to-Sep 30 period, there were 1,695 non-landed resale transactions, likely to surpass the 1,880 resale units transacted in the whole of 2023. The limited number of new launches in the CCR may have directed buyers to the secondary market.
The US Federal Reserve delivered a significant rate cut of 0.5 percentage points in September and signaled further cuts ahead, following 11 rate hikes from 2022 to 2023 to control inflation. A lower interest rate environment will boost market confidence, reduce debt burdens, and make borrowing more affordable.
Additionally, the improving economic outlook, a tight labor market, and a strong Singapore dollar—which helps preserve capital—are factors that could support the residential property market. Singapore is also viewed as a safe investment destination due to its stable political environment, pro-business policies, good infrastructure, and transparent laws.
There are ample buying opportunities in the CCR from completed projects, existing launches, and upcoming projects. According to PropNex, there were about 930 units available in the CCR as of Oct 8, 2024. These include units at completed projects such as Cape Royale, The Residences at W Sentosa Cove, and Cuscaden Reserve, as well as existing launches like One Bernam, Midtown Bay, Watten House, and Hill House.
Among the 930 units available for sale by developers in the CCR, two-bedroom and three-bedroom types make up the bulk of the stock at about 33% and 30%, respectively. District 4 has the highest proportion of available stock at about 37%.
PropNex data shows starting prices for available units in the CCR are around S$1.32 million for one-bedders, S$1.66 million for two-bedders, S$2.15 million for three-bedders, S$3.56 million for four-bedroom units, and S$7.25 million for five to six-bedroom units.
Several CCR projects are yet to be launched, such as the 246-unit Newport Residences, the 683-unit W Residences Singapore – Marina View, the 188-unit Aurea, and projects on government land sale (GLS) sites in Orchard Boulevard, River Valley Green, and Holland Drive, which can collectively offer more than 1,300 units.
Broad Base of Singaporean Buyers
Following the ABSD rate hike in April 2023, the proportion of foreigners (non-PRs) purchasing non-landed new or resale private homes in the CCR has dropped to 5.3% in the year-to-Sep 30, 2024. In 2023, the proportion of sales to foreigners was 10.4%, according to lodged caveats.
In the first nine months of 2024, Singaporeans and Singapore PRs accounted for 76% and nearly 19% of CCR non-landed private home sales, respectively. The continued majority of Singaporean homebuyers in the CCR is reassuring, forming a stable demand base for high-end homes.
Notably, Singaporeans who purchased non-landed new or resale private homes in the CCR have mainly entered the market at below S$3 million. There were 1,007 new and resale caveats lodged in the first nine months of 2024 in that price range, while in 2023, there were 1,680 caveats for such transactions. Meanwhile, there were 361 transactions by Singaporean buyers at prices ranging from S$3 million to S$5 million in the first nine months of 2024, with sales tapering substantially in higher price bands.
With growing wealth in Singapore and the region, a more positive market outlook in 2025, and the US Fed rate cut cycle beginning, the CCR may soon experience a resurgence.
Ismail Gafoor is CEO, and Wong Siew Ying is head of research and content at PropNex.
