In June 2024, Singapore's new-home sales increased slightly to 228 units from 221 in May, but the first half of the year remains the weakest in two decades, with fewer than 2,000 units sold. Contributing factors include high interest rates and government cooling measures, leading to cautious buyer sentiment. Despite this, private home prices have risen for four consecutive quarters, and public housing sales have hit new highs. Analysts predict that reduced mortgage rates could boost sales, but immediate impacts may be limited. The market continues to face challenges, including subdued interest in recent launches.
Singapore's new-home sales saw a slight increase in June, but overall, the first half of 2024 has been the weakest in two decades. Developers sold 228 units last month, a minor rise from 221 in May, according to the Urban Redevelopment Authority. In total, fewer than 2,000 units were sold in the first six months of the year, marking the lowest sales figures since 2004.
The slowdown in sales can be attributed to several factors, including high interest rates and government cooling measures aimed at stabilizing the housing market. These measures have led to a decline in buyer sentiment, making potential homeowners more cautious. As the ruling party prepares for upcoming elections, there is growing concern among voters about housing affordability. In response, the government has increased the supply of private housing to its highest levels in over a decade, hoping to alleviate some of the pressure on the market.
Analysts suggest that while future reductions in mortgage rates could stimulate sales, the impact of existing cooling measures is still being felt. Brandon Lee, an analyst at Citigroup Inc., noted that buyers are likely to remain patient due to a significant number of upcoming launches and projects with lower land costs. This means that even if mortgage rates decrease, the market may not see an immediate surge in activity.
The challenges facing the housing market have persisted into July, with recent launches underperforming. A large project introduced earlier this month managed to sell less than a quarter of its 440 units during its opening weekend, indicating that buyer interest remains subdued.
Despite these difficulties, property prices in Singapore continue to rise. Private home prices have increased for four consecutive quarters, and there has been a record number of public housing flats sold for over SUSD 1 million (approximately USD 745,000) in the first half of the year. This trend has positioned Singapore as the third-most expensive city globally for purchasing private homes, according to a report by Julius Baer Group Ltd.
The current situation highlights a complex dynamic in Singapore's real estate market. While there are signs of a slowdown, the high property valuations and ongoing demand for housing suggest that the market is still robust in certain areas. As the government continues to address housing supply and affordability, it remains to be seen how these efforts will impact future sales and overall market sentiment.
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