Economic Overview

Based on advance estimates, the Ministry of Trade and Industry (MTI) announced that the Singapore economy grew by 4.1% year-on-year (y-o-y) in 3Q 2024. The growth is led by the manufacturing sector which expanded 7.5% y-o-y. All manufacturing sectors recorded expansions apart from the biomedical manufacturing cluster. On a quarter-on-quarter (q-o-q) seasonally-adjusted basis, the sector grew by 9.9 per cent, a sharp turnaround from the 1.2 per cent contraction in the second quarter.

The Economic Development Board (EDB) also expects that business sentiments in the manufacturing sector remain positive, despite continuing geopolitical and macroeconomic headwinds. Similarly, all clusters barring biomedical manufacturing, anticipates improved business prospects till March 2025. The transport engineering (including aerospace and marine & offshore engineering segments) expects the most favourable business environment. This is followed by the general manufacturing cluster.

The Singapore Manufacturing PMI decreased slightly month-on-month (m-o-m) by 0.4% to 50.80 points from 51.00 points in October 2024. However, despite this small blip, manufacturing is still in an expansion mode.

However, there may be potential headwinds in the longer run. US under President-elect Donald Trump may impose higher import tariffs that will disrupt China, and the larger global arena. This may have a knock-on impact on the manufacturing supply chains in Asia and Singapore.

Price and Sales Transaction Volume

On 18 September, the U.S. Federal Reserve (Fed) announced that it was finally cutting interest rates after keeping them elevated over the past four years. The cut of 50 basis points lowers the Fed’s target rate range to 4.75% to 5.00%, down from the previous range of 5.25% to 5.50%. The rate was cut by a further 25 basis points to between 4.50% – 4.75% on 7 November 2024.

This cut gave buyers the confidence to enter the market. For investors, the higher rental yield of industrial properties are also more attractive than those of residential leasehold properties.  Moreover, industrial properties also comes without the punitive Additional Buyers’ Stamp Duty (ABSD). These factors may have provided both local and foreign investors the impetus to enter the market now.

Moreover, improved market sentiments and business environment brought about by the Fed rate cuts have led to higher manufacturing output. Industrialists, being more optimistic with the market conditions, are ramping up production when demand for goods and services are driven up. The manufacturing sector has picked up steam and businesses are moving forward ahead in business expansion. The lower financing cost could translate to lower operating costs.

Chart 1: Price Index and Transaction Volume

Source: URA, ERA Research and Market Intelligence

Prices of multiple-user factories and single-user factories rose 0.7% and 0.2% quarter-on-quarter despite fewer transactions. This is despite transactions falling for both sub-markets. While multi-user factory space saw 19.9% q-o-q fewer transactions, it was still 3.6% higher y-o-y. There was still strong demand for these units by both investors and end-users.

The most notable transaction in 3Q 2024 was in August. Lendlease and US private equity firm Warburg Pincus acquired $1.6 billion portfolio of assets from a Real Estate Investment Trust (REIT) portfolio owned by Blackstone and Soilbuild.

Separately, ESR-Logos REIT also purchased 51% stake in a manufacturing facility cum logistics warehouse at 20 Tuas South Avenue 14. This was part of the $772.6 million acquisition that also includes a 100% interest in a modern logistics facility in Nagoya, Japan.

More recently, Mercedes-Benz Singapore is selling the balance lease term of 16 years and 5 months of its property at 301 Jalan Ahmad Ibrahim back to JTC Corporation for $46.2 million.

 

Table 1: Top five sales transactions in 3Q 2024, based on caveats lodged

Source: URA, ERA Research and Market Intelligence

As Food and Beverage (F&B) businesses attempt to keep costs low with higher commercial rents, some have opted to centralise their kitchen operations at food factories. In particular, those with multiple outlets would use this cost-effective strategy. Hence, there are more interest among end-users for such food factories. In 3Q 2024, Food Xchange @ Admiralty moved three units, while Food Vision @ Mandai moved six units and Food Ascent in Tuas South moved another 16 units respectively.

Leasing and Leasing Volume

On the back of higher manufacturing output, the JTC All Industrial rental index continued its upward trend, rising for the sixteenth consecutive quarter in 3Q 2024. It climbed a further 0.3% q-o-q to 109.6, marking the highest point since 2Q 1996. However, growth has been slowing, falling from the 1.0% growth in 2Q 2024. This growth was led by Multiple-User Factory, where rents grew by 0.6% q-o-q.

While rental index has climbed marginally q-o-q, leasing volume have continued to rise for the second consecutive quarter as well. There were 3,304 tenancies signed in 3Q 2024, a 5.9% increase from the previous quarter. This follows the 5.8% growth in 2Q 2024.

Chart 2: Rental Index and Number of tenancies for industrial properties

 

Source: JTC JSpace, ERA Research and Market Intelligence

In conclusion

With better market sentiments and another 25-basis points of interest rate cuts forecasted, we will likely continue to see more growth in rents and prices. However, the growth would be more muted in light of firms still being cautious about the global geo-political outlook and higher supply of industrial stock coming in. Moreover, Fed rate cuts forecasts may not be as bullish as initially predicted. We are likely to see more transactions in the coming quarters. Investors would look to capitalise on lower financing cost add to their portfolio, while businesses may be bullish to expand their operations. Prices and rents are still looking to increase steadily, but at a sustainable rate of between 0.5% and 1.0% in the coming quarters.

By end-2024, we do expect seven new industrial developments to attain their Temporary Occupation Permit (TOP). This will inject another 193,000 sqm of industrial spaces into the market. 2025 will see a further 1.2 million sqm of industrial space attaining TOP. Some notable developments are Bulim Square 1 and 2, a business park in Punggol Way and JTC Space @ AMK. All three developments are developed by JTC Corporation.

Industrial buildings developed by JTC Corporation are not sold. Moreover, they have started leasing out the space even before completion. Hence, the surge in supply may not have as great an impact on prices and rents even upon completion.

Chart 3: Supply of Industrial Spaces’ Expected Completion Year

Source: JTC JSpace, ERA Research and Market Intelligence

 

Disclaimer

This information is provided solely on a goodwill basis and does not relieve parties of their responsibility to verify the information from the relevant sources and/or seek appropriate advice from relevant professionals such as valuers, financial advisers, bankers and lawyers. For avoidance of doubt, ERA Realty Network and its salesperson accepts no responsibility for the accuracy, reliability and/or completeness of the information provided. Copyright in this publication is owned by ERA and this publication may not be reproduced or transmitted in any form or by any means, in whole or in part, without prior written approval.

In total, October saw 738 new private homes sold, representing a 84.0% month-on-month (m-o-m) uptick over September’s performance (401 units sold). Year-on-year (y-o-y), new private home sales were also up 263.5% in October, compared to the 203 units sold over the same period in 2023.

This surge in transaction volume was primarily driven by the two new launches – Norwood Grand in Woodlands (OCR) and Meyer Blue along Meyer Road (RCR).

Norwood Grand, the first new launch in Woodlands in 12 years, sold 292 of its 348 units (83.9%) during its launch. The stellar launch day performance was due to the strong pent-up demand, coupled with the lack of supply for new private homes in the vicinity, leading to all 1 to 3-bedroom units being snapped up on its launch day.

Despite new benchmark prices for Woodlands, it was still an attractive opportunity for new home buyers today. At a median of just $2,081 psf, it presented a value buy for new homes, particularly one located near an MRT station. In the first nine months of 2024, new homes in the OCR sold at a median price of $2,145 psf.

Meyer Blue, on the other hand, moved 114 of its 226 units (50.4%) on its launch. The rarity of new freehold units along the prestigious Meyer Road made them highly sought after, particularly units with sea views. Being a freehold project, it captivates homeowners and investors buying for legacy purposes. In October 2024, a total of 124 units were sold at a median price of $3,240.

In October, 534 non-landed private homes were launched. This is was a 22.2% and 888.9% increase m-o-m and y-o-y respectively. Developers are rushing to launch new projects before the year end festive period when many potential buyers are away.

Impact of the Fed’s rate cut announcement in September

On 18 September, the U.S. Federal Reserve (Fed) announced that it was finally cutting interest rates after keeping them elevated over the past four years. The cut of 50 basis points lowers the Fed’s target rate range to 4.75% to 5.00%, down from the previous range of 5.25% to 5.50%.

This has largely translated into improved buyer confidence and more activity in the new private home market. Already, we have seen strong homebuyers’ interest in the upcoming launches. In total, Nava Grove, Emerald of Katong and Chuan Park drew more than 29,000 visitors to their respectively show flats over the weekend over the prior weekend. Beyond the strong take up rates at Norwood Grand and Meyer Blue, Chuan Park also sold 696 of its 916 units (76.4%) when it launched on 10 November 2024.

Best-Performing New Launches

Table 1: Top five performing new launch projects (excluding EC) in October 2024

The top five best-performing projects in October were respectively Norwood Grand (292 units), Meyer Blue (124 units), Pinetree Hill (71 units), Hillock Green (36 units), and Lentor Mansion (29 units).

While Norwood Grand had set new benchmark prices for homes in Woodlands, they were still within the affordable price range for homebuyers today. 1-bedroom units were mostly under $1.1 million, while 2-bedroom units were priced under $1.6 million. Investors see them as value buys in today’s market. On the other hand, 3-bedroom units were all priced under $2 million which sat well for HDB upgraders.

For Meyer Blue, units with sea view are mostly sold out as buyers are willing to pay a premium for such views. The development also has a prestigious address and located within an 8-minute walk to Katong Park MRT Station. Being at the city-fringe, residents have easy and quick access to the Central Business District (CBD).  A shortage of new homes in this location, and a lack of future residential sites nearby provided buyers the impetus required to secure a unit at Mayer Blue.

Pinetree Hill sold a total of 71 units in October, similar to the 72 sold in September. This comes after the second phase of launch, where higher-floor units were released for sale. In contrast, just 80 units were sold between January to August this year. Fresh demand could also have been fuelled by the interest in 8@BT, launched in September, and the upcoming Nava Grove in November.

Hillock Green (36 units) and Lentor Mansion (29 units), both located at the Lentor Hills estate, also saw renewed interest. This could be attributed to the spill over effects from Norwood Grand, located just two MRT stops away at Woodlands South.

Executive Condominium

In the Executive Condominiums (EC) segment, sales of new homes dipped slightly m-o-m, falling from 32 units sold in September to 28 units in October. This comes on the back of no new EC launch since January 2024 when Lumina Grand was launched.

EC sales are likely to pick up when the 504-unit Novo Place in Tengah is launched in November. This injection of fresh stock will also capture buyers’ interest for ECs in the west. They can choose from the remaining units at the nearby Altura (15 units) and Lumina Grand (85 units). In Yishun, North Gaia have another 44 units remaining.

Buyer Profile

Chart 1: Buyer profile for all new non-landed homes excluding ECs 

Foreigner demand for new non-landed homes (excluding ECs) continued to stay flat in September as 2023’s cooling measures continue to exert their influence on buyer appetite. Despite this, there were 20 new home transactions made by foreign buyers, the highest since May 2023 when there were 29 transactions.

However, the proportion of new non-landed homes have been relatively similar over the past 12 months. Singaporean citizen buyers accounted for 89.7% of total new home non-landed transactions. The past 12-month average stands at 85.9%.

Luxury Properties (Non-Landed Homes $5 Mil and Above)

A total of 31 luxury homes, priced at $5 mil and above, were transacted in October 2024. The highest-priced transaction was a 4,219 sqft unit at 32 Gilstead, which was purchased for $14.5 mil ($3,434 psf) by a foreigner.

Chart 2: Buyer profile for homes transacted at $5mil and more

What Lies Ahead for the New Private Home Market in Coming Months?

Following September’s recovery, October’s strong performance could also carry onwards into November. Buoyed by improved buyer sentiment and the excitement from the introduction of new highly anticipated projects, current momentum in the market will likely continue.

While Fed rate cuts forecasts may not be as bullish as initially predicted, any additional cuts will bolster market sentiment down the line. However, after the flurry of new launches in November, we do anticipate that the demand in the private home market could taper into December 2024 and January 2025 with the approaching holiday seasons.

At present, there are at least 10 new private developments in the pipeline, potentially yielding more than 4,600 units in total. This includes several mega-developments in popular heartland areas such as Parktown Residence (1,195 units) in Tampines, Chuan Park (916 units) in Serangoon, Emerald of Katong (846 units) in the East Coast area.

At its launch weekend, Chuan Park has already seen 76% of its 916 units snapped up since its launch. Union Square Residences and The Collective at One Sophia have also seen 81 and 37 units sold respectively since their launch in early-November.

Table 2: Potential new launches in 4Q 2024 / 1Q 2025

We do expect Emerald of Katong and Nava Grove to perform well when they launch on 16 November.

From January to October 2024, we have seen a total of 3,853 new home units sold. Accounting for current market conditions, ERA projects approximately 5,500 to 6,500 new private homes to be sold by the end of 2024.

Disclaimer

This information is provided solely on a goodwill basis and does not relieve parties of their responsibility to verify the information from the relevant sources and/or seek appropriate advice from relevant professionals such as valuers, financial advisers, bankers and lawyers. For avoidance of doubt, ERA Realty Network and its salesperson accepts no responsibility for the accuracy, reliability and/or completeness of the information provided. Copyright in this publication is owned by ERA and this publication may not be reproduced or transmitted in any form or by any means, in whole or in part, without prior written approval.

Private home rents rose marginally in 3Q 2024, along with rental transaction volumes. However, it remains to be seen if rental growth will sustain amid more completions and rising vacancies.

Overview

Following three consecutive quarters of decline, private home rents in Singapore reported a marginal recovery in 3Q 2024. This surprising reversal comes on the tail of a seasonal quarterly increase in rental contracts.

Tenants were also more likely to lean towards private home rentals, seeking greater value in properties with in-house amenities. This shift comes as the gap between private home and HDB flat rents narrowed over the past quarters.

Meanwhile, in the HDB market, demand held firm despite an increase in median rents and a slight dip in approved rent applications over the quarter. These shifts can be seen as the result of both increased upgrader activity and a declining number of HDB flats fulfilling their Minimum Occupation Period (MOP) in 2024, resulting in fewer HDB flats being put up for rent.

Employment

As at June 2024, the total foreign workforce (excluding domestic workers and workers in the construction, marine shipyard and process) stood at 807,400, up from the 798,000 in December 2023. That being said, rental demand from foreigners could be tempered by the recent spate of high-profile layoffs in the tech, manufacturing and banking sectors.

Private Residential Rental Market

Rental Index

In 3Q 2024, rents for all private residential properties recovered slightly by 0.8% quarter-on-quarter (q-o-q), breaking the streak of three consecutive quarters of decline.

This subtle uptick was consistent across the board, with non-landed and landed private properties alike experiencing marginal rental growth. Overall rents for non-landed properties rose 0.5% q-o-q in 3Q 2024, compared to the 0.8% q-o-q decrease registered the previous quarter. The landed segment registered a similar movement in overall rental growth, rising 3.2% q-o-q and offsetting the 0.9% q-o-q dip in 2Q 2024.

Among the various regions, the Core Central Region (CCR) was the only residential sub-market that experienced further correction as non-landed private property rents shrank 1.6% q-o-q in 3Q 2024. Conversely, the Rest of Central Region (RCR) and Outside Central Region (OCR) respectively saw small quarterly gains of 1.7% and 2.2% for non-landed properties.

Chart 1: Private Residential Rental Indexes

Rental Contracts

According to URA, a total of 24,664 rental contracts for non-landed private homes was recorded for 3Q 2024, marking a 22.8% q-o-q and 10.2% y-o-y increase.

In 3Q 2024, there were also 1,610 rental contracts for landed private homes. This marked a 45.9% q-o-q increase from the 1,103 contracts recorded in 2Q 2024.

Chart 2: Non-Landed Private Residential Rental Contracts  

Completion and Vacancy

Across regions, vacancy rates in 3Q 2024 rose to 11.2% in the CCR and 8.1% in the RCR, while the OCR vacancy rate held steady at 4.9%.

The higher vacancy at CCR was driven by the completion of One Holland Village Residences (551 units) and The Avenir (376 units), which added nearly 1,000 completed homes to the CCR. Similarly, the RCR saw the completion of One Pearl Bank (774 units), The Reef at King’s Dock (429 units), Verticus (162 units) which added nearly 1,400 completed homes.

According to URA, 3,253 private homes were completed in 3Q 2024. This brings the total number of private homes completed in the first nine months of 2024 to 5,376 units.

Another 3,727 private homes are expected to be completed in 4Q 2024. This includes 1,222 units in the CCR, 931 units in the RCR, and 1,574 units in the OCR.

In total, 2024 expects to see nearly 9,100 new home completions, just below half of the 19,968 completions in 2023.

HDB Rental Market

Median HDB rents of all flat types across towns

Median rents for all flat types moved upwards in 3Q 2024, rising between 0.1% and 4.5% q-o-q. Amongst towns, Jurong West reported the fastest rental growth, with rents rising q-o-q across most flat types from 3-room to executive units.

Table 1: HDB Median Rents in 3Q 2024

Rental demand for HDB flats

Rental demand for HDB flats remained firm in 3Q 2024, even with a smaller number of approved rental applications compared to previous periods. According to HDB, there were a total of 9,118 approved applications in 3Q 2024, or approximately 4.6% less than the previous quarter, which saw 9,554 rental cases.

This figure also brings the total number of HDB flats rented out to be 59,178 units as of 3Q 2024, which is a shade lower than the previous quarter’s count of 58,596 units.

Chart 3: Number of approved applications to rent out HDB flats by flat type

Conclusion

Although overall rents for private residences rose slightly in 3Q 2024, this is likely to be a short-lived uptick given the current steady supply of completions.

In total, 2024 is projected to see nearly 9,100 new home completions, just under half of the 19,968 completions in 2023. This growing pool of rent-ready homes is likely to weigh on rental prices moving forward.

By region, new completions in the CCR for 4Q 2024 are expected to drive up competition for tenants among landlords, thus placing downwards pressure on rents.

Separately, given the anticipated increase in RCR and OCR completions, with most units intended for owner-occupation, we can foresee rents in these regions experiencing a marginal uptick.

On a whole, demand for private property rentals is expected to stay buoyed in the near future as more HDB tenants’ transition to private housing, driven by a shrinking price gap between the two. Separately, rental demand in the CCR could shift towards the RCR/OCR; this comes as more foreign tenants turn cautious in their housing choices, following the recent spate of high-profile job cuts in the tech, manufacturing, and banking sectors.

In consideration of these factors, ERA has adjusted our forecast, anticipating a potential easing of private home rents by 1–3% y-o-y, with the total number of rental contracts expected to range between 80,000 and 90,000 by the end-2024.

In contrast, rents for HDB flats are expected to rise further, bolstered by the tight supply of HDB flats that have fulfilled the five-year MOP. Present estimates indicate that around 12,000 MOP flats will be available in 2024, with an even smaller number of 7,000-odd units available next year. Given these insights, ERA anticipates a 5-10% uptick in rents y-o-y across all flat types, with HDB rental approvals estimated to reach between 36,000 to 38,000 contracts by the end-2024.

Disclaimer

This information is provided solely on a goodwill basis and does not relieve parties of their responsibility to verify the information from the relevant sources and/or seek appropriate advice from relevant professionals such as valuers, financial advisers, bankers and lawyers. For avoidance of doubt, ERA Realty Network and its salesperson accepts no responsibility for the accuracy, reliability and/or completeness of the information provided. Copyright in this publication is owned by ERA and this publication may not be reproduced or transmitted in any form or by any means, in whole or in part, without prior written approval.

In total, September saw 401 new private homes sold, representing a 92.8% month-on-month (m-o-m) uptick over August’s performance (208 units sold). Year-on-year (y-o-y), new private home sales were also up 84.8% in September, compared to the 217 units sold over the same period in 2023.

This surge in transaction volume was primarily driven by new home sales within the Rest of Central Region (RCR), which was the best performing market segment for the month.

In turn, the RCR’s performance was largely due to 8@BT. During its launch weekend, the Bukit Timah development sold 83 units or roughly 53% of its available units. Buyer interest in 8@BT may have also spilled over to other projects, such as Pinetree Hill and Hillhaven – both of which experienced upticks in sales volumes.

Impact of the Fed’s rate cut announcement in September

On 18 September, the U.S. Federal Reserve (Fed) announced that it was finally cutting interest rates after keeping them elevated over the past four years. The cut of 50 basis points lowers the Fed’s target rate range to 4.75% to 5.00%, down from the previous range of 5.25% to 5.50%.

This has largely translated into improved buyer confidence and more activity in the new private home market. Already, we have seen other new launches, aside from 8@BT, delivering strong sales results. For instance, Meyer Blue, which is the second new project to debut after the Fed’s rate cut, sold 50% of its units on launch day.

Best-Performing New Launches

Table 1: Top five performing new launch projects (excluding EC) in September 2024

The top five best-performing projects in September were respectively 8@BT (83 units), Pinetree Hill (68 units), Hillhaven (45 units), Tembusu Grand (30 units), and Hillock Green (22 units).

72% (60 units) of new private home transactions at 8@BT were one- and two-bedders, which sold for between $1.34 mil to $1.59 mil and $1.81 mil to $2.21 mil respectively. Such an outcome aligns with recent buyer trends, where sales at previous top-performing developments like Kassia and Sora were largely driven by smaller units priced at $1.5 million or below.

A mix of favourable factors contributed to brisk sales at 8@BT, including its status as a premium development in a prime location near Beauty World MRT station and upcoming amenities, such as Bukit V shopping centre.

Moreover, at the time of its launch, 8@BT was also the only fully residential project in Bukit Timah with units still on the market.

Other new home options in the vicinity are scarce; the Linq @ Beauty World is fully sold out and is nearing completion, whereas The Reserve Residences is already 97% sold. Consequently, this could have shifted buyer attention towards 8@BT.

In the same vein, interest in 8@BT could have also fuelled fresh demand for other projects in District 21. In September alone, Pinetree Hill sold a total of 72 units, compared to the 80 units sold between January to August this year.

Additionally, units at Pinetree Hill sold at a median price of $2,501 psf, lower than 8@BT’s $2,727 psf. This mix of more affordable pricing and a quicker completion time may have swayed buyers to opt for a unit at Pinetree Hill over 8@BT.

Hillhaven in District 23 also experienced a similar surge in sales volume with 45 units sold in September, more than triple of the 14 units moved in August. This makes September the second-best month for sales at Hillhaven since January, when developer sales amounted to 64 units.

Executive Condominium

In the Executive Condominium (EC) segment, sales of new homes dipped slightly m-o-m, falling from 36 units sold in August to 29 units in September.

Though the EC market is poised for an injection of fresh stock with the anticipated launch of Novo Place (504 units) in 4Q 2024, sales are likely to remain tepid until then.

In the meantime, EC buyers have the option to choose from available units across North Gaia (62 units), Altura (19 units) and Lumina Grand (101 units).

Buyer Profile

Chart 1: Buyer profile for all new non-landed homes excluding ECs 

Foreigner demand for new non-landed homes (excluding ECs) continued to stay flat in September as 2023’s cooling measures continue to exert their influence on buyer appetite.

In contrast, the number of Singapore Permanent Resident (SPR) buyers rebounded from last month’s low. Based on caveat data from URA Realis, SPR buyers purchased a total of 31 new non-landed homes in September, marking a reversal from the 17 units purchased in August.

Luxury Properties (Non-Landed Homes $5 Mil and Above)

A total of 12 luxury homes, priced at $5 mil and above, were transacted in September 2024. The highest-priced transaction was a 4,209 sq ft unit at 32 Gilstead, which was purchased for $14.6 mil ($3,408 psf) by a SPR.

Chart 2: Buyer profile for homes transacted at $5mil and more

What Lies Ahead for the New Private Home Market in Coming Months?

September’s strong performance could carry into the closing months of 2024, buoyed by improved buyer sentiment and the introduction of new projects that could sustain the current momentum.

Any additional Fed rate cuts could bolster market sentiment down the line as well, while paving the way for increased private housing market activity – though likely not a large scale. Likewise, new private home demand could also be tempered by the approaching holiday season as well as existing cooling measures.

At present, there are at least 13 new private developments in the pipeline, potentially yielding a total of 6,204 units. This includes several mega-developments in popular heartland areas such as Parktown Residence (1,195 units) in Tampines, The Chuan Park (916 units) in Serangoon, Emerald of Katong (846 units) in the East Coast area.

Table 2: Potential new launches in 4Q 2024 

Among the upcoming projects, Norwood Grand is expected to perform well, driven by its attractive pricing and pent-up demand in Woodlands.

As the first new launch in Woodlands in over a decade, Norwood Grand is poised to attract strong interest. Furthermore, with prices for its three-bedroom units projected to range between $1.6 mil and $1.7 mil, Norwood Grand presents an appealing option for HDB upgraders.

Accounting for current market conditions, ERA projects approximately 5,500 to 6,500 new private homes to be sold by the end of 2024.

Disclaimer

This information is provided solely on a goodwill basis and does not relieve parties of their responsibility to verify the information from the relevant sources and/or seek appropriate advice from relevant professionals such as valuers, financial advisers, bankers and lawyers. For avoidance of doubt, ERA Realty Network and its salesperson accepts no responsibility for the accuracy, reliability and/or completeness of the information provided. Copyright in this publication is owned by ERA and this publication may not be reproduced or transmitted in any form or by any means, in whole or in part, without prior written approval. 

Figures are based off the official flash estimates for URA quarterly statistics, released on 1 Oct 2024.

Weaker buyer sentiment has led to lower transaction volumes, contributing to a decline in private home price growth

Amidst a slowdown in overall transactions in 3Q 2024, the All-Residential Property Price Index (PPI) showed a slight decline. This correction is largely attributable to fewer new launches, which have traditionally fuelled price growths. 

Various headwinds continued to exert pressure on the private property market. A wave of local layoffs in the banking and tech sectors weighed on buyer sentiments in the earlier months. Likewise, prior to the Federal Reserve Board (Fed’s) rate cut announcement in September, buyers were also more likely to be cautious due to elevated interest rates affecting affordability.

This combination of retrenchment fears and tighter borrowing criteria led to some prospective buyers adopting more cautious stances, and ultimately, softer private home transaction volumes in 3Q 2024.

Revised GDP Forecast and Rate Cuts Offer Hope, But Rising Retrenchments Weigh on Buyer Confidence

According to the Monetary Authority of Singapore (MAS), private sector economists have revised their gross domestic product (GDP) growth forecast for 2024 from 2.4% to 2.6%. Paired with the Fed’s latest rate cut and other positive economic indicators, such as low unemployment rate, could renew homebuyers’ sentiment.

But more concerningly, the number of retrenchments has been steadily increasing since Q4 2022, with retrenched citizens taking longer to return to work. These factors combined could lead to more cautious buyer sentiment, with buyers turning conservative.

Private Residential Home Prices

Figures from URA’s flash estimates indicate that the All-Residential PPI decreased by 1.1% quarter-on-quarter (q-o-q). This is a reversal of the previous quarter, which saw prices growing modestly by 0.9% q-o-q.

Chart 1: All-Residential Property Price Index versus Transaction Volume

In the non-landed private home segment, prices shrank by 0.3% q-o-q in 3Q 2024. This is a reversal of the last quarter’s performance, which posted a 0.6% q-o-q gain in non-landed private home prices.

Spearheading these shifts, only the Rest of Central Region (RCR) posted an increase in non-landed private home prices among regional sub-markets, registering a flattish 0.2% q-o-q uptick in 3Q 2024. In contrast, the Outside Central Region (OCR) and Core Central Region (CCR) both saw prices falling by 0.1% and 1.5% q-o-q respectively.

In the landed property sub-market, prices shrank by 3.8% q-o-q in 3Q 2024, reversing the 1.9% q-o-q growth rate registered for 2Q 2024.

Transaction Volume 

Transaction numbers for all private properties exhibited a slowdown in 3Q 2024.  Based on flash estimates, a total of 4,372 units were sold in 3Q 2024. This reflects a q-o-q decline of 11.0%, from the 4,915 units sold in 2Q 2024. Compared to last year, transaction volume has also decreased by 15.9% y-o-y, down from 5,201 units in 3Q 2023.

New Sale Transactions (Non-Landed Private Homes)

3Q 2024 saw a total of three project launches, with Kassia and Sora launched in July and 8@BT launched in September. With the Hungry Ghost Festival falling in August this year, developers exhibited customary reluctance in launching new projects, resulting in fewer launches for 3Q 2024.

Caveat data from URA Realis as of 30 Sept shows that developers sold 1,033 new non-landed private homes (excluding ECs) in 3Q 2024, marking a 42.5% q-o-q increase from the 725 units transacted in 2Q 2024. These figures place the total number of new non-landed private homes (excluding ECs) sold 3Q 2024 at approximately 2,922 units.

Table 1: Best-selling new launches in 3Q 2024

Some 71.7% of new home transactions in 3Q 2024 fell below $2.5mil, a sweet spot pricing for most buyers. A substantial 26.3% of new home transactions were priced below $1.5 million, primarily driven by smaller units at Kassia and Sora.

Additionally, based on caveat data, fewer HDB upgraders purchased new condos in 3Q 2024 compared to the previous quarter. In 3Q 2024, purchasers with HDB addresses made up only 15.4% of all new condo buyers, a drop from 27.1% in 2Q 2024. It is also worthy to note that a significant number of buyers that have not provided their address in 3Q 2024.

The wider price gap between new and resale private homes, driven primarily by rising prices of the former, has priced HDB upgraders priced out of the new home market.

Resale and Sub-Sale Transactions (Non-Landed Private Homes, Excluding EC) 

Sales of non-landed private homes (excluding ECs) continue to be largely driven by resale transactions. Based on caveats, secondary market transactions accounted for 68% of all non-landed private residential sales in 3Q 2024, closely aligning with the 75.5% share in 2Q 2024.

This is despite the 18.9% q-o-q drop in the number of non-landed private homes (excluding ECs) sold on the secondary market, from 3,295 units in 2Q 2024 to 2,672 units in 3Q 2024.

Buyer demand in the secondary market also stayed robust as the price gap between new launches and resale non-landed private homes remains significant. Based on caveat data, the gap between average psf prices for new and resale non-landed private homes was 52% in 3Q 2023; this has since shrunk to 39.2% in 3Q 2024. 

Sub-sales of non-landed private homes similarly dropped by 39.2% q-o-q, from 370 units in 2Q 2024 to 225 units in 3Q 2024. However, this decline can be seen as a consequence of recently completed, mid-to-large sized projects like Dairy Farm Residences (460 units) and Affinity at Serangoon (1,052 units) being fully sold out, rather than a lack of buyer interest.

Core Central Region 

Amongst the three regional sub-markets, the CCR showed the sharpest decline in price, falling 1.5% q-o-q for non-landed private properties (excluding ECs). This continues the trend from 2Q 2024, which saw prime district prices falling 0.3% q-o-q. 

Caveat data also showed that transaction volumes for non-landed private properties in the CCR also fell 27.3% q-o-q in 3Q 2024, reversing the 16.6% q-o-q increase seen in 2Q 2024. 

Apart from the ongoing pressure from the Additional Buyer’s Stamp Duty (ABSD) hike on foreign buyers, the q-o-q decline in CCR transactions in 3Q 2024 can also be traced to the higher base in the previous quarter, lifted by price adjustments on projects at Sentosa and Cuscaden Reserve.

Closer scrutiny of caveat data also reveals a steep decline in the number of CCR luxury non-landed private homes sold in the primary market. Transactions for such properties in the $5M and above range fell 44% q-o-q, with sales falling from 25 units in 2Q 2024 to just 14 units in 3Q 2024.

Rest of Central Region

Registering the biggest growth in prices, URA’s flash estimates showed that non-landed private properties in the RCR appreciated 0.2% q-o-q in 3Q 2024, more flattish than 2Q 2024’s growth rate of 1.6% q-o-q.

Based on URA caveats as of 30 Sept, transactions for non-landed private properties in the RCR shrank slightly by 10.4% q-o-q in 3Q 2024, reversing the increase observed in 2Q 2024. A likely reason for this shift is the rising cost of non-landed private property in the RCR, as indicated by its price index growing from 213.0 in 3Q 2023 to 215.7 in 3Q 2024.

As a result, HDB upgraders residing in the RCR, who have typically looked within the region for opportunities, may be more likely to turn their eye towards secondary stock; these include resale HDB flats in the suburbs or condos in the OCR

Outside Central Region

In the OCR, prices of non-landed private properties shrank 0.1% q-o-q; this reverses the trend from 2Q 2024, which saw prices growing a flattish 0.2% q-o-q. In contrast, prices of non-landed private homes in the OCR grew y-o-y, demonstrated by corresponding price indices rising from 237.4 in 3Q 2023 to 248.9 in 3Q 2024 (flash).

In contrast, according to caveat data, transactions for non-landed private homes in the OCR fell by 3.97% q-o-q and 4.23% y-o-y in 3Q 2024. 

As detailed above, escalating private property prices in the OCR might have contributed to this shift. Given the rise in costs, price-sensitive homebuyers are likely more inclined to opt for resale HDB flats in prime locations or newer HDB units, instead of an OCR private condo. 

Outlook

In the coming months, we anticipate a rise in new home transaction volumes, due to the line-up of upcoming launches that could contribute to some 5,200 units in 4Q 2024.

Some notable launches in 4Q 2024 include Meyer Blue at Meyer Road, Norwood Grand at Champions Way, and Chuan Park in Lorong Chuan, and Emerald at Katong. Novo Place (EC).

Table 2: Potential new launches in 4Q 2024

We expect to see greater buyer receptiveness with sanguine economic sentiment and the first round of Fed interest rate cuts materialising in September. In any event, any additional Fed rate cuts, in the future, could bolster market sentiment down the line, while also paving the way for more housing market activity, though not in large droves, in 2025.

Among the regions, we expect the CCR to continue seeing muted activity, while RCR and OCR demand are likely to rise with the influx of year-end new launches supported by HDB upgraders and private owner looking to right-size.

Table 3: Market forecast for non-landed private residential properties

	New Sale	Resale/Sub-sale
Price	Increase between 3% to 5%
Volume	5,500 to 6,500 units	12,000 to 13,000 units

ERA projects the total resale transaction volume to reach between 12,000 and 13,000 units, with price to rise by 3% to 5% y-o-y in 2024. For new sale transactions, factoring current market conditions, ERA has revised our forecast to between 5,500 to 6,500 units by end-2024, a revision from the previous 7,000 to 8,000 units.

Disclaimer

This information is provided solely on a goodwill basis and does not relieve parties of their responsibility to verify the information from the relevant sources and/or seek appropriate advice from relevant professionals such as valuers, financial advisers, bankers and lawyers. For avoidance of doubt, ERA Realty Network and its salesperson accepts no responsibility for the accuracy, reliability and/or completeness of the information provided. Copyright in this publication is owned by ERA and this publication may not be reproduced or transmitted in any form or by any means, in whole or in part, without prior written approval. 

Figures are based off the official flash estimates for HDB/URA quarterly statistics, released on 1 Oct 2024.

Continuing the trend of moderate price growth for resale flats, the latest HDB flash estimates indicate a modest uptick in prices for 3Q 2024, with the Resale Price Index (RPI) rising to 192.6. Quarter-on-quarter (q-o-q), this represents an increase of 2.5% over 2Q 2024.

Similarly, the volume of resale HDB flat transactions reached 8,035 units in 3Q 2024. This is 20% higher compared to the same period last year, which saw 6,695 transactions.

Some 311 million-dollar flats were transacted in 3Q 2024. This makes up merely 3.9% of the 8,035 resale transactions.

Despite the robust growth in transaction volume, prices for most resale flats remained affordable, with 77.0% of HDB resale transactions under the $750k mark.

This increase in transaction volume is due to a confluence of factors including unsuccessful applicants from June Build-To-Order (BTO), homebuyers looking for centrally located flats without new restrictions, and weaker buyers’ sentiment in the private market.

Some HDB upgraders are being priced out of private homes in 3Q 2024. Looking at non-landed private home caveats, purchasers with HDB addresses fell to 28.8%. This contrasts with 37.2% and 33.8% recorded in 2Q 2024 and 1Q 2024 respectively.

The lower number of condo upgraders likely means that these homebuyers defaulted to the HDB market instead, driving transactions and therefore prices. This homebuyer group has the capital and are willing to purchase million-dollar flats, leading to the rise in transactions.

The above statistics on the HDB resale market largely reflect the market conditions prior to the lowering of the Loan-to-Value limit for HDB loans from 80% to 75% on 20 August 2024 to cool the resale market and encourage greater prudence among home buyers.

Revised GDP Forecast and Rate Cuts Offer Hope, But Rising Retrenchments Weigh on Buyer Confidence

According to the Monetary Authority of Singapore (MAS), private sector economists have revised their gross domestic product (GDP) growth forecast for 2024 from 2.4% to 2.6%. Paired with the Federal Reserve’s latest rate cut and other positive economic indicators, this could renew homebuyers’ sentiment.  Furthermore, the overall unemployment rate remained low at 2.7% in the first half of 2024.

But more concerningly, the number of retrenchments has been steadily increasing since Q4 2022, with retrenched citizens taking longer to return to work. These factors combined could lead to more cautious buyer sentiment.

HDB Resale Price Index (RPI) and Transaction Volume

The HDB RPI exhibited stable growth, rising by 2.5% q-o-q to 192.6 in 3Q 2024; this marks the highest growth observed since 3Q 2022. The price index also saw an uptick of 7.9% year-on-year (y-o-y).

Based on resale flat transactions, the volume of HDB transactions saw continued growth for the third consecutive quarter.

The 8,035 transactions recorded in 3Q 2024 is a 9.3% increase q-o-q from 7,352 transactions in 2Q 2024, and a 20% increase y-o-y from 6,695 transactions in 3Q 2023. This is also the highest number of transactions recorded in a quarter since 3Q 2021.

Chart 1: HDB Resale Index vs Number of Transactions

Source: HDB, ERA Research and Market Intelligence as of 1 October 2024
*Based on flash estimates

This increase in transactions could be a result of homebuyers who were unsuccessful in their June Build-To-Order (BTO) application turning to the resale market instead.

Over the years, the HDB market has consistently bucked the trend of lower transaction volumes associated with the Hungry Ghost Festival. With younger Singaporeans becoming less superstitious and less influenced by such beliefs, more of them have been purchasing resale HDB homes during this period, driving up transaction numbers.

Secondly, as the reclassification of BTO flats kicks in, entailing resale restrictions might discourage and deter homebuyers from purchasing a BTO flat, instead driving them to the resale market.

Next, weaker buyer sentiment has led to fewer private home upgrades in 3Q 2024. Looking at non-landed home caveats, purchasers with HDB addresses fell to 28.8%. This contrasts with the 37.2% and 33.8% recorded in 2Q 2024 and 1Q 2024 respectively.

More than half of HDB transactions were below $750k

Chart 2: HDB Transactions by Price Ranges

Source: data.gov.sg as of 30 Sep 2024, ERA Research and Market Intelligence

Some 53% of the HDB resale transactions in 3Q 2024 fell between $500k and $750k, a comfortable price range for most Singapore homebuyers. Another 24% fell between $250k and $500k.

Million-dollar flats

Some 311 million-dollars flats were transacted in 3Q 2024. This makes up merely 3.9% of the 8,035 resale transactions.

Chart 3: HDB Flat Transactions over $1m

Source: HDB as of 26 September 2024, ERA Research and Market Intelligence
*Based on flash estimates

With fewer HDB flats meeting the Minimum Occupation Period (MOP) in 2024, demand for MOP flats in prime locations have skyrocketed, resulting in the continued rise in the number of million-dollar flats.

Furthermore, BTO projects in mature estates no longer offer 5-room and larger flats. As such, we have observed more 4-room million-dollar flats transacted in the quarter. These 4-room flats appeal to homebuyers looking for larger, more centrally located homes.

Who are purchasing these million-dollar flats?

HDB upgraders who might have traditionally opted to purchase a private condominium have opened their options to purchasing these larger, newer and centrally located million-dollar flats. With the rising prices of private homes, they see the value proposition and are willing to pay for these cream-of-the-crop resale flats.

In addition to this, there are also private property sellers emerging from the 15-month wait-out period with the capital to fund these million-dollar HDB purchases.

October BTO launch set to draw some buyers away from the resale market

The final BTO launch of 2024 will take place in October. This launch will constitute 14 new projects, consisting of 8,500 units. This will be the first BTO launch to include the new classification of Standard, Plus, and Prime flats, providing a wider range of housing options, including flats in attractive locations.

As the new Plus flats, along with Prime flats would have more stringent resale restrictions such as a longer MOP, resale income ceiling, and subsidy clawback upon resale.

These resale restrictions might discourage and deter homebuyers from purchasing a BTO flat, instead driving them to the resale market, particularly in prime and choicer locations, such as in mature estates, central Singapore or near MRT stations.

Conclusion

The HDB resale market experienced a surge in transaction volume that continues to drive price growth, albeit at a moderate pace.

The growth in transaction numbers can be attributed to a lower number of HDB homeowners upgrading to a private property in the quarter, due to a variety of reasons.

With private homes becoming increasingly expensive, HDB upgraders and private home downgraders are instead turning to the HDB resale market. This also extends towards larger and higher value HDB flats with strong locational attributes.

The lower number of condo upgraders likely means that these homebuyers defaulted towards the HDB market instead, driving transactions and therefore, prices. This homebuyer group also likely has the capital to purchase million-dollar flats, leading to the rise in transactions.

But with the re-classification of BTO flats, we can expect some buyers to turn to the HDB resale market in efforts to avoid the more stringent resale conditions.

Going forward, we can still expect strong demand and competitive prices for larger flats, such as 5-room and Executive flats, as the upcoming Plus and Prime BTO flats do not include 5-room or larger layouts.

Performance of the resale market should stay accurate to ERA’s 2024 forecast of 6-9% growth in prices, with 29,000 to 30,000 resale flats expected to move.

Disclaimer

This information is provided solely on a goodwill basis and does not relieve parties of their responsibility to verify the information from the relevant sources and/or seek appropriate advice from relevant professionals such as valuers, financial advisers, bankers and lawyers. For avoidance of doubt, ERA Realty Network and its salesperson accepts no responsibility for the accuracy, reliability and/or completeness of the information provided. Copyright in this publication is owned by ERA and this publication may not be reproduced or transmitted in any form or by any means, in whole or in part, without prior written approval. 

The Federal Reserve (Fed) has finally cut interest rates after keeping them elevated over a prolonged period.

On 18 September 2024, the Fed announced a cut of 50 basis points (bps), lowering its target interest rate range to 4.75% to 5.00%. This marks a decrease from the previous range of 5.25% to 5.50%, the highest in 23 years.

Notably, this is the first rate cut following a series of hikes that began in 2022, which were implemented to combat rapidly rising inflation. This long-awaited decision will impact lending rates by commercial banks, thereby reducing borrowing costs for consumers and business operators alike across various financial products – from mortgages to credit loans.

Market analysts predict further interest rate cuts by end-2024, with an additional 50 bps expected to be shaved off. In addition, a further rate cuts are expected to be announced in 2025. Should these reductions materialise, this will bring the federal funds target range down to 3.25% to 3.50% by the end of 2025.

Hence, if you’re keen on committing to your first (or next) home purchase, these changes could mean lower local interest rates are on the cards. Plus, here’s a breakdown of three key developments you can expect:

 

1. Lower interest rates could be on the horizon as the Singapore Overnight Average (SORA) is historically influenced by FED interest rate cuts

Source: Fed, MAS, ERA Research and Market Intelligence

In 2019, as  Fed cut interest rates to address a slowing economy, the 3-Month Compounded SORA (3M SORA), which is used as a benchmark for Singapore home loans, also moved in tandem, dropping from 1.5% in October 2019 to levels below the 1% mark This near-zero low persisted till Q2 2022.

Since March 2023, the Federal Reserve has implemented a series of consecutive rate hikes. These increases continued until July 2023 and have remained consistently high since then. Back home, the 3M SORA took on a similar trajectory.

Given the recent FED rate cut, we could see the 3M SORA taking on a similar direction. Going forward, Fed will continue to base future rate cut decisions on data-driven analysis and implement a measured approach. With that, we can expect a gradual and measured pace of decline in interest rates in the future.

 

2. For those on a home loan with a floating mortgage rate, your monthly instalment could be lower over the next few months

Table 1: Interest Rates and The Corresponding Monthly Instalment

Interest Rate (%)	Monthly Instalment ($1mil loan quantum)	Monthly Instalment ($2mil loan quantum)
3.00%	$4,742	$9,484
2.75%	$4,613	$9,226
2.50%	$4,486	$8,972
2.25%	$4,361	$8,723
2.00%	$4,239	$8,477

Source: ERA Research and Market Intelligence, based on 25-year loan tenure

 

Given the strong likelihood of local interest rates tracking Fed movements, homeowners with existing floating rate mortgages have good reason to expect favourable news. A corresponding fall in the 3M SORA would offer a silver lining in the clouds, as borrowing costs fall for them.

As it stands, reports in Singapore also confirm that local banks have already “priced in” the effects of the Fed’s latest rate cut. So, should borrowers refinance at this point?

The answer: perhaps. Homeowners should most certainly explore their refinancing options, and in the medium, a floating rate package could be more attractive given the potential rate cuts ahead.

 

3. The MAS stress test interest rate, used to assess the loan quantum, remains unchanged for now

By using the stress test interest rate, the Monetary Authority of Singapore (MAS) determines how much borrowers can safely borrow for mortgage loans. This measure helps prevent over-leveraging and ensures that borrowers can comfortably handle their monthly repayments in times of elevated interest rates.

Or, put simply, the stress test rate sets an upper limit for loan amounts.

MAS last raised the stress test rate from 3.5% to 4% in September 2022, but some banks are using already using a higher stress test rates of 4.5%. And although there has been no official word regarding a review yet, a potential decrease will allow qualified borrowers to secure a larger loan quantum.

Table 2: Max Property Price Based on Stress Test Rates and Monthly Household Income

Source: ERA Research and Market Intelligence, based on 30-year loan tenure and 55% TDSR and 75% LTV
Loan quantum has been rounded to the nearest thousands.

To help you understand what all this means to you, let’s take a look at a case study.

Mr and Mrs Tan who earn a monthly household income of $15k is looking to buy their new home.

1. Loan quantum based on stress test rate

 

Based on a stress test rate of 4.2%, the maximum property price they can afford is $1.53 mil for a $2.25 mil property.

But should the stress test rate fall to 3.5%, they can afford to buy a higher loan of up to $1.65 mil for a $2.45 mil property

After Mr and Mrs Tan have secure their loan quantum, let’s see how the interest rates impact their monthly instalments.

2. Monthly instalment based on interest rate

 

Assuming a loan of $1.53 mil for a $2.25mil property, Mr and Mrs Tan will be paying up to $6,451 in monthly instalment at an interest rate of 3.00%.

Should interest rates fall to around 2.25% over the next few months, the monthly instalment will correspondingly reduce to $5,858 per month.

Table 3: Interest Rates and he corresponding Monthly Instalment

Source: ERA Research and Market Intelligence, based on 25-year loan tenure

In closing

In any event, additional Fed rate cuts, whether now or in the future, could bolster market sentiment down the line, while also paving the way for more housing market activity in 2025.

As a potential homebuyer, you may be wondering if now is the right time to enter the market. We expect any decrease will be on a marginal basis Given the current trend of moderating interest rates, you might also be weighing the advantages of investing in a new property with a strong track record.

Given the competitive nature of the banking industry, we can expect banks to follow each other’s lead in adjusting their interest rates. Now is a good time for those looking to refinance their loans, as you can expect more attractive loan packages to become available.

While some may opt to wait for clearer market trends before making a move, we believe that 2024 could usher in favourable opportunities. If you’ve been planning to invest in one of the many new launches currently available, now could be the perfect time to make a move.

 

Disclaimer

This information is provided solely on a goodwill basis and does not relieve parties of their responsibility to verify the information from the relevant sources and/or seek appropriate advice from relevant professionals such as valuers, financial advisers, bankers and lawyers. For avoidance of doubt, ERA Realty Network and its salesperson accepts no responsibility for the accuracy, reliability and/or completeness of the information provided. Copyright in this publication is owned by ERA and this publication may not be reproduced or transmitted in any form or by any means, in whole or in part, without prior written approval. 

August saw 208 new private homes sold, including seven landed units from the Pollen Collection. This figure represents a 63.6% month-on-month (m-o-m) decline, marking the lowest number of new private home sales since February 2024, when 149 units were sold. The steep decline can be attributed to the absence of new project launches during the Hungry Ghost Month, as well as the high sales base in July 2024. Year-on-year (y-o-y), sales of new private homes were down by 43.6%.

Also, due to tight supply of new Executive Condominiums (EC), only 36 units were moved in the month.

The Hungry Ghost festival has historically led to dampened developer activity as well. Consequently, only 272 units were launched across five existing projects this August.

Best Performing New Launches

Table 1: Top five performing new launch projects (excluding EC)

Name	Market segment	Total units	Number of units sold	Median price ($psf)
TEMBUSU GRAND	RCR	638	30	$2,455
HILLOCK GREEN	OCR	474	17	$2,108
LENTORIA	OCR	267	15	$2,217
HILLHAVEN	OCR	341	14	$2,153
LENTOR HILLS RESIDENCES	OCR	598	13	$2,148

Source: URA as of 17 Sep 2024, ERA Research and Market Intelligence, ERApro

The top five best-selling projects in August are all within a 10-minute walk from an MRT station, reflecting buyers’ preferences of living near MRT stations for easy accessibility.

Tembusu Grand was the best-selling project for August, moving another 30 units at a median price of $2,455 psf. We observed a resurgence of buyer interest in the area, following the opening of the Thomson-East Coast Line (TEL), as well as upcoming launches such as Meyer Blue and Emerald of Katong. The opening of the TEL line could have also boosted interest among potential buyers concerned about the area’s connectivity.

Three of the top five best performing developments were located in the Lentor Hills Estate, demonstrating its popularity among new homebuyers. Hillock Green (17 units), Lentoria (15 units) and Lentor Hills Residences (13 units) sold below the islandwide median new sale price of $2,238psf in August.

Looking ahead, we anticipate buyers gravitating towards homes located in new residential precincts, which like Lentor Hills estate, are within walking distance to neighbourhood amenities and an MRT station.

Additionally, these interested buyers may prefer to purchase now rather than waiting and risking being priced out of the market when the supply of new private homes in Lentor Hills dries up.

With a median price psf of just $2,148, Hillhaven also proved to be a value buy for homebuyers looking for a unit in the West. The development’s unit mix caters to most families’ needs, and it is within walking distance of Hillview MRT and Rail Mall. The combination of these elements presents a strong value proposition to buyers.

Executive Condominium

In the EC segment, sales of new homes remained stable for August at 36 units, clocking in the same number sold in July. North Gaia was the best-performing project, with 24 units moved at a median price of $1,306 psf.

Though the EC market is poised for an injection of fresh stock with the anticipated launch of Novo Place (508 units) in 4Q 2024, sales are likely to remain tepid until then.

In the meantime, EC buyers have the option to choose from available units across North Gaia (62 units), Altura (19 units) and Lumina Grand (101 units).

Buyer Profile

New private home demand from foreign buyers continued to remain low in August, with just five transactions made. On the other hand, the number of new private homes bought by Singapore Permanent Residents (SPRs) fell to 18 units in August, down from last month’s 64 units.

Chart 1: Buyer profile for all new non-landed homes excluding ECs 

Luxury Properties (Non-landed Homes $5 mil and above)

A total of six luxury homes, priced at $5M and above, were transacted in August 2024. The highest-priced transaction was a 4,198 sqft unit at 32 Gilstead, which was purchased for $14.7 million ($3,505 psf) by a Singapore Permanent Resident (SPR).

Chart 2: Buyer profile for all new non-landed homes excluding ECs transacted at $5mil and more

Source: URA as of 12 Sep 2024, ERA Research and Market Intelligence

What can we expect in the last four months of 2024?

While August’s performance was underwhelming compared to July’s strong showing, we should see an increase in new sale transactions in September.

The launch of 8@BT, a 158-unit development near Beauty World MRT Station alongside impending interest rate cuts could spark homebuying activities towards the end of the year.

The coming months will also see the launch of more new projects. There are 13 new private developments in the pipeline, potentially yielding a total of 6,204 units. This includes several mega-developments in popular heartland areas such as Parktown Residence (1,195 units) in Tampines, The Chuan Park (916 units) in Serangoon, Emerald of Katong (846 units) in the East Coast area.

Even with the improved economic growth sentiment, the projected rate cuts and a lower inflation forecast, buyers could remain cautiously optimistic. Current cooling measures are still in effect and are likely to put a dent in the pace of recovery.

While the first eight months of 2024 saw just 2,628 new units moved, compared to 5,333 in the same period in 2023, we may still see a rebound in new sale transactions by the end of the year, provided they are launched at the right time and with competitive pricing.

ERA forecasts that 5,500 to 6,500 new private homes will be sold by end-2024. We also expect new home price growth to reach between 4% to 6% y-o-y by the end of 2024.

Disclaimer

This information is provided solely on a goodwill basis and does not relieve parties of their responsibility to verify the information from the relevant sources and/or seek appropriate advice from relevant professionals such as valuers, financial advisers, bankers and lawyers. For avoidance of doubt, ERA Realty Network and its salesperson accepts no responsibility for the accuracy, reliability and/or completeness of the information provided. Copyright in this publication is owned by ERA and this publication may not be reproduced or transmitted in any form or by any means, in whole or in part, without prior written approval. 

The Ministry of Development (MND) and Housing Development Board (HDB) have jointly announced a set of cooling measures for the HDB resale market and additional grants to provide further support to lower-to-middle income first-time home buyers.

Adjustment of Loan-To-Value limit for HDB loans

With effect from 20 August 2024, the Loan-to-Value (LTV) limit for HDB loans will be lowered from 80% to 75%, akin to mortgage loans granted by financial institutions. The revised HDB LTV limit will apply to complete resale applications received by HDB on or after 20 August 2024. A complete resale application is one where HDB has received both the sellers’ and buyers’ portions of the application.

Additional Enhanced CPF Housing Grants (EHG) for lower income families and singles

Separately, to provide more support to lower-to-middle income first-time home buyers, the Government will increase the Enhanced CPF Housing Grant (EHG) quantum for new and resale flats to support first-time home buyers. The EHG will be increased by up to $40,000 for eligible first-timer families, from the current maximum grant amount of $80,000, up to $120,000. Additionally, EHG for eligible first-timer singles will increase by up to $20,000, from the current maximum grant amount of $40,000 to $60,000.

 

This is the fourth cooling measure targeted at the HDB market since 2021. The first cooling measure was in December 2021, where LTV for HDB loan was lowered from 90% to 85%. The LTV limit was subsequently reduced to 80% in September 2022.

 

Date	Cooling Measure
December 2021	LTV lowered from 90% to 85%
September 2022	LTV lowered from 85% to 80% Private property owners will have to wait for 15 months after selling their property before they can buy a non-subsidised HDB resale flat.
August 2024	LTV lowered from 80% to 75%

Possible factors behind the cooling measure implementation

The lower LTV has been put in place as a direct measure to cool the HDB resale market. Here are three key metrics behind the implementation of today’s cooling measure.

Between 2Q 2020 (start of pandemic) and today, the HDB Resale Price Index (RPI) rose a staggering 42.5%. The number of resale applications have also trended upwards, reporting a 4.0% growth quarter-on-quarter (q-o-q) and 12.9% year-on-year (y-o-y) growth.

Chart 1: HDB RPI and Resale Applications

Source: HDB, ERA Research and Market Intelligence

The most crucial metric would be the number of million-dollar flats resold. In 2020, the market saw only 82 of such flats. But in just first seven months of 2024, we have seen 539 million-dollar flats in the market. Among which, 13 of these transactions were at least $1.5 mil or higher.

The September 2022 cooling measure requires private property owners to wait-out for 15 months after selling their property before they can buy a non-subsidised HDB resale flat. Between 3Q 2022 and 4Q 2023, the resale market saw an average of 112 million-dollar flat transactions each quarter.

By 1Q 2024, coinciding with the first batch of private property owners completing their 15-month wait-out period, the number of million-dollar flat transactions surged to 183, followed by 236 transactions in 2Q 2024.

Chart 2: Million-dollar HDB flats

Source: data.gov.sg as at 20 Aug 2024, ERA Research and Market Intelligence

How will the lower LTV affect homebuyers?

With a lower LTV in place, today’s buyers are expected to fork out a higher deposit. To illustrate, we have provided the following scenarios to help buyers understand the implications of lower LTV.

In both Example 1 and 2, the buyers have combined CPF savings of $150,000, which will require no cash top up for the deposit when buying a 4-room flat. But if they decide to buy a 5-room flat, they will need to top up $20,000 in cash to meet the shortfall in deposit. In the case of these examples, the cash outlay is reasonably manageable by most buyers today.

Example 1: Buying a 4-room HDB flat with sufficient CPF to cover the excess deposit

Source: ERA Research and Market Intelligence

Example 2: Buying a 5-room HDB flat with insufficient CPF to cover the excess deposit

Source: ERA Research and Market Intelligence

However, looking at the example below illustrates a possible cash outlay that many buyers of such million-dollar flats are facing.

Example 3: Buying a million-dollar 5-room HDB flat with insufficient CPF to cover the excess deposit

Source: ERA Research and Market Intelligence

Many of these buyers already need to pay a high Cash-Over-Valuation (COV) amount and may need to provide even more cash if they don’t have sufficient CPF funds to cover the higher deposit.

Which buyers are affected by this LTV change?

We do not expect this change to affect a large proportion of HDB resale buyers since many of them are financially prudent. But there could be a small group of buyers who may be affected by this change.

1. Buyers who have little CPF funds will have to fork out more cash going forward.
2. Buyers who may have little cash and CPF and are relying on the valuation to reduce their cash outlay.

EHG to increase, offering support to first-time homebuyers

For the eligible Singaporeans, the EHG will be revised to provide additional support for lower-to-middle income households buying new or resale flats. The maximum EHG for First-Timer Families and Singles, depending on monthly household income, will offer them greater help in managing the higher deposit required with the lower LTV limit.

Comparing the current and revised EHG, the lower band of household income will see a significant increase in grants. For First-Timer families that earn less than $5,000 per month, the revised grants will amount to between 40% and 50% more than before. This will provide substantial supports to lower-to-middle income households looking to buy their first home.

 Chart 3: Enhanced Housing Grants for Eligible First-Timer Families

Source: MND, ERA Research and Market Intelligence

Chart 4: Housing Grants for Eligible First-Timer Singles

Source: MND, ERA Research and Market Intelligence

ERA’s closing comments

Through the implementation of this new cooling measure, it is apparent that the Government recognises financing as an important factor in managing financial prudence among homebuyers.

By lowering the LTV for loans granted by the HDB (which are cheaper at 2.6% compared to bank loan rates), it may indirectly compel buyers to be more conservative when making their offers to purchase HDB resale flats. This may result in a stabilisation of HDB resale prices in the long run.

We are in full support of the Government’s ongoing dedication to ensuring HDB flats stay affordable for Singaporeans. The latest policy tweaks reflect a strong commitment to ensuring that citizens of all demographics have access to affordable housing, which is integral to upholding the social fabric of Singapore.

 

Disclaimer

This information is provided solely on a goodwill basis and does not relieve parties of their responsibility to verify the information from the relevant sources and/or seek appropriate advice from relevant professionals such as valuers, financial advisers, bankers and lawyers. For avoidance of doubt, ERA Realty Network and its salesperson accepts no responsibility for the accuracy, reliability and/or completeness of the information provided. Copyright in this publication is owned by ERA and this publication may not be reproduced or transmitted in any form or by any means, in whole or in part, without prior written approval. 

Sales of new homes picked up steam in July 2024, more than doubling month-on-month (m-o-m) from June’s 228 units to 571 units (excluding Executive Condominiums).

Another 37 units of Executive Condominium were sold in the same month.

The upswing in sales numbers comes on the back of two top performing new launches that made their debut in July, namely Kassia (276 units) and SORA (440 units).

With Kassia and SORA selling 154 and 103 units respectively, these top performers collectively made up 45% of July 2024’s new home sales, further shoring up the Outside Central Region’s (OCR) dominance in the residential primary market.

Although July’s performance for new home sales is the strongest by far since April 2024, it still marks a substantial drop year-on-year compared to the 1,412 units sold in July 2023.  This July saw fewer project launches compared to last year, which featured larger developments like Grand Dunman (1,008 units), Lentor Hills Residences (598 units), Pinetree Hill (520 units), and The Myst (408 units).

Separately, July also marks the first time in 2024 that new home transactions of $1M and below were recorded. A majority of the one-bedroom units from Kassia fell within this price range, making it an attractive entry price for investors looking for a freehold unit.

Best Performing New Launches

Table 1: Top five performing new launch projects (excluding EC) 

Name	Market segment	Total units	Number of units sold	Median price ($psf)
KASSIA	OCR	276	154	$2,049
SORA	OCR	440	103	$2,152
THE LAKEGARDEN RESIDENCES	OCR	306	41	$2,212
HILLHAVEN	OCR	341	29	$2,088
GRAND DUNMAN	RCR	1,008	24	$2,583

Source: URA as of 15 Aug 2024, ERA Research and Market Intelligence

Kassia clinched the top spot in July’s new home sales, moving 154 of its 276 units (56% sold) at a median price of $2,049 per square foot. This strong performance cements Kassia’s position as the second best-selling launch of 2024. Kassia’s solid performance is built on the backbone of its freehold status, as well as a competitive price point.

The next top performer, SORA (440 units) saw 101 units transacted at a median price of $2,152 psf. Notably, the bulk of units moved during SORA’s weekend comprised of one-bedders with a study, which had starting prices of $996,000 – as well as two-bedders, priced upwards from $1.3M. SORA’s debut has also given the area a fresh injection of smaller new private homes, specifically 1- and 2-bedders, which have mostly sold out at neighbouring The LakeGarden Residences.

With 41 units moved at a median price of $2,212 psf, The LakeGarden Residences ranks third among July’s best-selling projects. This is a continuation of the project’s strong showing in June, having placed first with 23 units sold at $2,119 psf during an otherwise tepid month. With the launch of Sora, The LakeGarden Residences moved another 25 of the 3-bedroom and larger units as some buyers who were waiting to compare the prices and layouts between the projects, have finally committed to a purchase.

Executive Condominiums

In the EC segment, sales of new homes remained stable for July, clocking in at 37 units sold.

Among existing EC projects that saw new sales activity, the top performers were North Gaia and Lumina Grand. A total of 26 units of North Gaia were transacted at a median price of $1,319 psf, and another 11 units were moved for a median price of $1,492 psf at Lumina Grand.

Though presently subdued, the EC market is poised for an injection of fresh stock with the anticipated launch of Novo Place (508 units), jointly developed by Hoi Hup Realty and Sunway Developments, in 4Q 2024.

Buyer Profile

New home demand from foreign buyers dipped even further in July as 2023’s cooling measures continue to take their toll on sales numbers. The number of Singapore PR buyers (69 units) more than doubled m-o-m and is the highest seen last November.

Based on data from URA Realis, foreign buyers lodged only six caveats in July, a further decline from the 11 registered the previous month. Among these, one was for a property priced between $1M and $1.5M, four were for properties priced between $2M and $2.5M, and one was for a property priced between $3.5M and $4M.

Chart 1: Buyer profile for all new non-landed homes excluding ECs 

Source: URA, ERA Research and Market Intelligence

Luxury Properties (Non-landed Homes $5 mil and above)

A total of two luxury homes, priced at $5M and above, were transacted in July 2024. Both deals were from Midtown Modern.

Chart 2: Buyer profile for homes transacted at $5mil and more

Source: URA, ERA Research and Market Intelligence

What can we expect in 2H 2024?

Despite July’s performance giving 2H 2024 a strong kick-off, the market for new homes is expected to remain tepid in August in view of the Hungry Ghost Festival (4 August to 2 September). Typically, this period is characterised by a slower market with fewer launches.

Highly anticipated launches projected to launch such as Meyer Blue (226 units), Emerald of Katong (846 units), and The Chuan Park (916 units) could drive new home sales later in 2H 2024. Collectively, the new launches scheduled for 3Q 2024 will introduce an estimated total of 2,512 units. Alongside a further 4,200 units scheduled for 4Q 2024, this should significantly surpass the 2,495 units launched in 1H 2024.

Despite probable rate cuts in Sept, we do not anticipate a swift market rebound. While Singapore’s economy is expected to stay resilient, downside risks remain. Therefore, we expect homebuyers to remain cautiously optimistic under today’s climate.

In view of these factors, ERA forecasts that 5,500 to 6,500 new private homes will be sold by end-2024. We also expect new home price growth to reach between 4% to 6% y-o-y by the end of 2024, given the prevailing cautious economic mood.

 

Disclaimer

This information is provided solely on a goodwill basis and does not relieve parties of their responsibility to verify the information from the relevant sources and/or seek appropriate advice from relevant professionals such as valuers, financial advisers, bankers and lawyers. For avoidance of doubt, ERA Realty Network and its salesperson accepts no responsibility for the accuracy, reliability and/or completeness of the information provided. Copyright in this publication is owned by ERA and this publication may not be reproduced or transmitted in any form or by any means, in whole or in part, without prior written approval.