New residential sales volume in Q4 2022 and full year 2022: the lowest in 14 years

According to the Q4 2022 Residential Sales Report published by Savills Singapore Research, the new sales volume declined for the second consecutive quarter by 68.4% quarter-on-quarter (QoQ) to 690 units in Q4/2022, the lowest in 14 years, since Q4/2008, when new sales volume amounted to 419 units. On a year-on-year (YoY) basis, the decrease was a larger 77.1%.

For the whole of 2022, new sales totaled 7,099 units, 45.5% lower than the 13,027 units sold in the primary market in 2021. This was also the lowest in 14 years since 2008, when new sales volume amounted to 4,264 units.

Due to increasing interest rates and macroeconomic uncertainties, secondary sales volume fell by 26.8% QoQ to 2,898 units in Q4/2022, with the Core Central Region (CCR) recording the largest decline (30.1% QoQ). Secondary sales fell by 42.6% YoY in Q4, with the total volume for 2022 dropping by 28.0% YoY after two consecutive years of increase.

There was a 47.9% drop in Singaporeans buying, almost halving from the 4,420 units in Q3/2022 to 2,303 units in Q4/2022. This was the lowest since Q2/2020 when local purchases amounted to 1,865 units.

Similarly, sales of non-landed homes by permanent residents and foreigners also declined in the quarter, albeit at a moderated pace of 25.3% and 13.5% to 667 units and 224 units respectively.

PRICES

The URA property price index of all private residential properties continued to rise for the 11th consecutive quarter in Q4/2022, although the increase was much lower at 0.4% QoQ compared to the 3.8% rise in Q3/2022. For the whole of 2022, the URA property price index of private residential properties rose 8.6%, moderating from the 10.6% recorded in 2021. Landed and non-landed homes prices grew 9.6% and 8.1% respectively.

Luxury non-landed private residential projects tracked by Savills rose for the ninth consecutive quarter by 0.9% QoQ to S$2,568 psf in Q4/2022, which represents a 3.8% YoY increase. This is the largest annual growth in prices in 4 years, since 2018, when prices also grew by 3.8%. The rise was driven in part by Singapore's safe haven status for high-net-worth individuals.

MARKET OUTLOOK

Buyer behavior in the first two months of 2023, as seen from the performance of Terra Hills and The Botany at Dairy Farm, indicates that people are more focused on affordability rather than the number of bedrooms when buying a property.

The launches' performance also suggests that challenging economic circumstances and higher mortgage rates have not deterred buyers. Therefore, Savills Research forecasts a 7% rise in private residential property prices in 2023.

Alan Cheong, Executive Director of Savills Research and Consultancy says, "The new sale market has so far shrugged off the pressure of economic malaise and higher mortgage rates and instead, is setting price records."

Marcus Loo, Chief Executive Officer at Savills Singapore says, “The Singapore residential market continues to move along at a healthy pace. However, the concern on the horizon is whether land prices can continue to rise without taking a breather as new demand is now concentrating even more in the smaller unit types”.

Read the full Briefing here.