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Singapore home prices rebounded more than expected in the third quarter, a sign of how resilient the market remains despite government intervention and fragile economic conditions.
Private home valuations rose by 0.8% from the previous three months, reversing its first drop in three years, according to data released by the Urban Redevelopment Authority Friday. An initial estimate had prices rising 0.5%.
The city-state’s real estate boom has so far dodged the downturns seen in other major cities, prompting major curbs to cool the overheated market. In contrast, rival financial hub Hong Kong cut housing taxes this week to boost its ailing property sector.
Local demand is “still healthy” although growth will be more muted going forward into 2024, said Ken Foong, a Bloomberg Intelligence analyst. Uncertainties about the economy and high interest rates, along with more supply will pose some downside risk to prices next year, he said.
Home sales have fallen in recent months — albeit during a quiet period for major new projects — reaching their lowest level this year in September. With at least 10 private residential projects in the pipeline for the fourth quarter, developers are likely to be more cautious on pricing amid softening land valuations, wrote Citigroup Inc. analyst Brandon Lee in a note this month.
Still, with locals continuing to chafe at the affordability of homes, authorities have shown little signs of moving away from the curbs, which included the doubling of taxes on property purchases for foreigners to 60% in April. The largest jump in the city-state’s population in 15 years is likely to further buoy housing demand.
Meanwhile, Singapore’s record rents, which have also been a significant pain point for expats and locals alike, are also showing further sign of easing. An index of rents for private homes published by the URA gained 0.8% from the second quarter, when it gained 2.8%. That’s the slowest increase since the last quarter of 2020.
That easing is “within expectation as rents escalated too quickly last year,” said Christine Sun, senior vice president of research and analytics at real estate agency OrangeTee & Tie in a note. Tenants have opted for cheaper accommodation outside the private market or moved out from Singapore entirely because of that, she said.
