Overview of the Market Changes

In a surprising turn of events for the Singapore property market, the resale prices of private condominiums have seen a decline for the first time this year, as flash estimates from SRX and 99.co revealed a month-on-month decrease of 0.5% in October. This dip coincides with rising transaction volumes, which have increased by an impressive 8.1%, suggesting a notable shift in market dynamics.

Price Fluctuations by Region

Breaking down the figures, the Rest of Central Region (RCR) recorded a 0.8% drop in prices, while the Core Central Region (CCR) and Outside Central Region (OCR) experienced modest gains of 0.5% and 1%, respectively. Despite this monthly contraction, overall condo resale prices remain robust on a year-on-year basis, with the CCR increasing by 3.7%, the RCR by 3.3%, and the OCR by 3.9%.

Expert Insights

"This is a significant moment for the market," commented Mr. Luqman Hakim, chief data and analytics officer at 99.co. "The last time prices dropped was back in December 2023, indicating that this recent fall could signal a shift in investor sentiment."

Mr. Mohan Sandrasegeran, head of research at Singapore Realtors Inc (SRI), attributed the decline in private resale prices to a surge in new supply, with a record 3,225 non-landed units gaining their temporary occupation permits in Q3 of this year. "Such an influx of completed units could be impacting resale prices," he noted.

Surge in Transaction Volumes

Interestingly, the uptick in transaction volumes has been noteworthy, with 1,124 units sold in October compared to 1,040 in September—an impressive year-on-year increase of 29.1% and 11.3% above the five-year average for this month. Analysts suggest that recent interest rate reductions by the US Federal Reserve may have played a crucial role in stimulating resale activity in Singapore's market.

As Mr. Ismail Gafoor, CEO of PropNex, highlighted, the expected further Fed rate cuts seem to be encouraging an influx of buyers into the resale market. The three-month compounded Singapore Overnight Rate Average (Sora) has seen a decrease from 3.54% to 3.25% per annum since mid-September, presenting a potentially favorable environment for home loans.

Regional Sales Insights

Regional breakdowns indicate that OCR transactions dominated, accounting for 50% of the overall sales, followed by the RCR at 31.1% and the CCR at 18.9%. The OCR's activity was significantly influenced by HDB upgraders, with 331 units purchased in October, marking a 5.8% rise from the previous month's 313.

Market Highlights

Moreover, October's market saw the highest transacted price for a resale unit reaching a staggering $14.1 million at Cuscaden Reserve. The overall median capital gain stood at $368,000—an increase of $9,000 from September, with District 20 reporting the highest median capital gain at $650,000.

Future Market Outlook

While current trends reflect a temporary cooling in resale prices, experts anticipate a rebound after the holiday season. Ms. Christine Sun, chief researcher at OrangeTee, foresees a slowing in resale volumes in the closing months of 2023 due to new project launches and the usual year-end festivities, but she expects demand to surge again once the celebrations are over.

Looking ahead, Ms. Sun also warns that resale prices are likely to climb further, as demand is expected to outstrip supply in the coming year, especially considering a projected 41.3% decrease in private home completions by 2025. The ongoing tension between newly launched developments and resale properties may continue to create disparities in pricing, potentially benefiting investors looking to capitalize on market fluctuations.

Conclusion

Stay tuned for more updates as the Singapore real estate landscape continues to evolve!