Private property prices in Singapore fell by 1.1% in the third quarter of 2024, reversing the 0.9% increase in the previous quarter. This sudden drop marks a shift that many investors and homeowners are paying attention to. But what’s behind this change?
Why are Buyers Hesitant?
The primary reason for the dip is a decline in demand. People are more reluctant to buy homes at this time, mainly due to high prices and economic uncertainties. Developers have also slowed down sales, leading to fewer new home launches.
Between July and September, only 1,054 new private homes (excluding executive condos) were sold. Although this is a 45% increase from the second quarter’s 725 units, it still falls far below the average of 2,214 homes sold per quarter over the past five years.
Buyers are waiting for the “perfect” time to buy, but the market is shifting. With interest rates starting to drop since September and expected to continue falling until 2026, the landscape is set to change. Lower interest rates usually attract more buyers, creating increased competition and, consequently, higher prices.
The Numbers Behind the Dip
In Q3 2024, property prices dropped by 3.8% for landed properties, a sharp contrast to the 1.9% increase in the previous quarter. Non-landed private properties, such as condos, saw a smaller dip of 0.3%, reversing a 0.6% rise from the second quarter.
Notably, prices in the Core Central Region (CCR), known for its prime locations, experienced the most significant drop at 1.5%, following a modest 0.3% decrease in the previous quarter. This may signal an opportunity for buyers looking at high-end properties.
Interestingly, despite a decrease in the number of transactions, the average price of new condos surged by 42% from July, climbing from $1.7 million to nearly $2.4 million. This suggests that wealthier buyers, possibly attracted to limited supply or attractive investment opportunities, are still actively driving the market.
What’s Causing the Sales Drop?
The primary driver is high interest rates. With borrowing costs having surged above 4% in recent months, many potential buyers have been priced out or are hesitant to make a purchase. The higher cost of loans makes homes less affordable, discouraging new buyers and slowing market activity.
However, with rates starting to decrease in September and expected to continue on this trend, many experts predict a potential shift in consumer sentiment. Lower interest rates can make mortgages more manageable and encourage more buyers to enter the market.
As buyer sentiment improves, we may see an increase in competition, especially for new properties. Historically, when interest rates drop, the rebound in demand is swift and can lead to increased property prices.
A Window of Opportunity
So, what does this mean for you as a potential buyer? If you’re waiting for prices to drop further before buying, you might be missing an opportunity. The current market offers a unique chance to secure a property before more buyers jump in. Once competition heats up, prices are expected to rise again as more people take advantage of the lowered interest rates.
Consider this: When interest rates were above 4%, many buyers held back, unsure of the financial impact. Now, as rates fall, consumer confidence could rebound, leading to a surge in demand and higher property prices. Waiting for the market to “correct” itself might mean waiting too long, missing out on the chance to purchase at current prices.
Final Thoughts
The market is unpredictable, with fewer new launches and cautious buyer behavior. However, signs point to a potential rebound as interest rates fall and buyer sentiment shifts. This could lead to a quicker price increase once more buyers re-enter the market.
What do you think about Singapore’s property market right now? Are you considering buying or waiting? Share your thoughts and let’s discuss how to navigate this evolving landscape.
Stay informed, stay ahead!
