Singapore: Condo resale prices fall for the first time in over two years; transactions dip 22.6% in January: SRX,

RESALE prices of private condominiums dropped for the first time in 28 months, as prices slipped in the city fringe and suburban areas, and dragged on overall prices in January.

Flash estimates from SRX and on Monday (Feb 27) showed that overall condo resale prices in January dipped 0.6 per cent month on month.

In the Rest of Central Region (RCR), prices were down 0.2 per cent. In the Outside Central Region (OCR), where prices have risen the most over the past year, they fell 1.2 per cent. However, prices in the prime Core Central Region (CCR) rose by 2.5 per cent in January from December.

Islandwide, condo resale prices are still higher year on year – by 6.4 per cent in the CCR, 7.8 per cent in the RCR and 9.7 per cent in the OCR.

The last time prices registered a decline was September 2020, said Christine Sun, OrangeTee’s senior vice-president of research and analytics, when resale prices slipped by 1 per cent “after the pandemic’s onset and implementation of various safe-distancing measures”.

Slow sales over the Chinese New Year period resulted in transactions falling 22.6 per cent month on month, to 519 units in January. Sales volumes were down 43.2 per cent compared with a year ago, and were 35.5 per cent lower than the five-year average volumes for the month of January.

Condo resale volumes have been falling for four months, since lending limits were tightened in September 2022 and interest rates rose.

Analysts expect sales volumes to remain muted, with Huttons Asia chief executive Mark Yip estimating a cap on transactions at 12,000 units in 2023, due to higher interest rates.

Nearly half of January’s transactions were in the OCR, while 30.6 per cent were in the RCR. CCR units constituted 20.7 per cent of total deals.

The price gap between sellers and buyers remains wide, and sellers may face some price pressures when more homes are completed in the coming months, said OrangeTee’s Sun.

She added that some homeowners may be inclined to keep their units for rental income, as rents remain firm.

Overall resale condo prices, however, could remain relatively stable as limited resale stock may help prop up prices, said PropNex Realty head of research and content Wong Siew Ying.

Nicholas Mak, head of research and consultancy at ERA Realty Network, said the drop in the resale condo price index was “only a temporary correction and not the start of an overall condo price decline”. He pointed to steady demand from both local residents and foreigners.

“Any property price drop will be like a dinner bell for the hungry homebuyers,” noted Mak.

The highest transacted price in January stood at S$15.5 million for a resale unit at Boulevard Vue.

In the RCR, the highest transacted price was for a unit at Reflections At Keppel, which was resold for S$4.5 million. A unit at The Palette topped the OCR price chart at S$2.73 million.

The overall median capital gain for resale condos was S$278,000 in January – a decrease of S$12,000 from the month before.

The overall median unlevered return for resale condos stood at 23.9 per cent in January. District 16 (Bedok/Upper East Coast) had the highest median unlevered return, while District 4 (Harbourfront/Telok Blangah) had the lowest.

Head of research at Pow Ying Khuan believes the recent Singapore Budget move to increase housing grants for first-time buyers for Housing and Development Board resale properties may result in greater demand for them.

“This could push some second-timer homebuyers to look at resale condos instead,” he said.

Pow expects higher resale activity in the coming months, amid the loosening of restrictions for foreigners entering Singapore and the strength of the Singapore dollar against foreign currencies.