SINGAPORE – New private home sales in December sank to lows last seen during the 2008 global financial crisis, as buyers stayed cautious in the face of heightened macroeconomic uncertainty and higher borrowing costs, and as developers held back new launches amid the year-end lull.

Developers’ sales, excluding executive condominiums (ECs), plummeted 82.8 per cent to 135 in December – the lowest monthly sales tally since January 2009 when 108 new units were sold.

On a yearly basis, sales were down 20.6 per cent from 170 units in December 2022. Including ECs, new home sales were down 81 per cent to 152 units.

Ms Chia Siew Chuin, JLL’s head of residential research for Singapore, noted that the average take-up rate of new projects (at least 100 units) in the first month of launch slowed to 55 per cent in 2023, from 72 per cent in 2022.

She cited buyers’ resistance to higher prices amid downbeat macroeconomic conditions, several rounds of cooling measures, elevated interest rates and ample new housing options.

For the whole of 2023, 6,452 new homes, excluding ECs, were sold, representing the lowest annual sales since 2008, when just 4,264 units were transacted, analysts said.

Developers launched just 36 new units for sale in December – a six-month low since June 2023, when 31 units were released – down from 970 units in November.

There are about 40 residential projects lined up for launch in 2024, but only about half may launch in the next 12 months, noted Mr Nicholas Mak, chief research officer at property search portal Mogul.sg.

Even as the slew of upcoming new launches in 2024 could translate into higher developers’ sales, he pointed to several factors pressuring the market.

For one thing, private housing demand from HDB upgraders may weaken as the number of HDB resale transactions with cash-over-valuation (COV) has dropped. This could translate to a smaller housing budget for those upgrading to private properties, he said.

COV is the difference between the sale price of a flat and its actual HDB valuation, which is paid for in cash by the buyer. About 15 per cent of buyers forked out COV for their flats in the fourth quarter of 2023, down from almost 30 per cent in the same period in 2022, National Development Minister Desmond Lee said on Jan 15.

Mr Mak noted that investors’ demand could be hit by further weakness in residential rental rates in 2024. Foreign buyers will also stay sidelined by the doubling of additional buyer’s stamp duty (ABSD) rates to 60 per cent, and despite healthy household balance sheets, local buyers are likely to take more time to commit.

Knight Frank head of research Leonard Tay noted that in 2023, the city fringe sub-market launched the highest number of new units at 4,268 and also scored the highest sales at 3,153 units. This was followed by the suburbs, which saw 2,688 units launched and 1,988 units sold.

While just 726 new units were launched in the prime district in 2023, 1,532 new units were sold despite the more punitive ABSD rates for foreigners, Mr Tay said. “This shows that underlying domestic demand for prime properties continues to prevail (in spite of) uncertain economic conditions.”

JLL’s Ms Chia said some 11,000 new private homes may be launched in 2024, but the actual number will be adjusted based on developers’ assessments, sales plans and strategies.

“While developers are likely to adopt a more sensitive pricing strategy in view of the larger launch pipeline and tentative sentiment, major price corrections are not expected due to high land and development costs, low unemployment rate, ample market liquidity, as well as the potential for economic improvement and a moderation in interest rates in second-half 2024,” she said. 

Analysts expect new home sales to pick up in January, supported by the upcoming launch of 172-unit The Arcady at Boon Keng in the city fringe, and 341-unit suburban condo Hillhaven in Hillview Rise.

The 512-unit Lumina Grand EC in Bukit Batok, which will open for booking on Jan 27, will likely be well received due to its relatively more affordable pricing, they say.

Ms Wong Siew Ying, PropNex’s head of research and content, noted that the median transacted unit price of new ECs was $1,345 per sq ft (psf) in December, compared with $2,123 psf for non-landed private new homes sold in the suburbs.

In terms of quantum, new private homes priced between $1.5 million and $2 million accounted for 32.4 per cent of all new homes sold in 2023, ERA Singapore chief executive officer Marcus Chu said.

Another 20.8 per cent of new homes sold were within the $2 million and $2.5 million range, while 18.2 per cent were in the $1 million and $1.5 million range.

“Buyers remain cautious about price quantums amid elevated interest rates. Those ranging up to $2.5 million will form the bulk of the transactions even in 2024,” he said.