Market uncertainty weighs on buyer sentiment

• Prime non-landed new home sales fell 33.6% q-o-q in 4Q22 as newly launched projects in the quarter received fairly tepid responses. Top performers in the quarter were in previously launched developments such as Perfect Ten (58 units sold at a median price of SGD 2,994 per sq ft) and Leedon Green (32 units sold at a median price of SGD 2,870 per sq ft).
• In the Prime resale market, transaction volume was down 25.1% q-o-q, resulting in total Prime sales volume falling 29.3% q-o-q. The slower market momentum in 4Q22 could be due to soaring interest rates and a weakening economic outlook, coupled with the September 2022 property cooling measures and the year-end period when many were travelling overseas.

More project completions in 4Q22 but vacancy remains low

• Based on available information as at end-December 2022, Prime project completions in 4Q22 included Sloane Residences, 3 Cuscaden, 10 Evelyn, Jervois Prive, Jervois Treasures, Dunearn 386 and 120 Grange. However, some of those listed above could receive their Temporary Occupation Permits at a later date, subject to government processes.
• Total completions in 2022 was slightly lower than in 2021 as Fourth Avenue Residences (476 units), a major project initially slated for full completion in end-2022 was delayed. This led to an upward revision in the forecast number of completions in 2023.

Growth in prime rents accelerate while prices see steady growth

• Prime prices registered steady growth in the quarter despite lower market activity as there are limited available units in the primary market due to declining unsold stock. The supply of units for resale is also tight as current owners lack motivation to dispose of their property with little price upside.
• Growth in Prime rents accelerated for the fourth straight quarter, driven up by the limited supply of available units and stronger leasing demand.

Outlook: Cautiously optimistic future for the Prime market

• The increase in Prime prices could slow in 2023 due to softer sentiment from slower economic growth, rising interest rates and recent cooling measures. However, Singapore’s safe haven status should continue drawing foreign investors, keeping demand healthy. Developers’ and owners’ healthy financial positions should exert little pressure for major price reductions, hence preventing price declines.
• Growth in Prime rents could weaken in 2023 as the economy slows and a larger injection of completed supply is expected. Tenant resistance to high rents could also start setting in, putting a lid on rental growth for the year.