Summary
(1) In 2Q 2024, property developers launched and sold the lowest number of private housing units since 4Q 2022.
(2) By comparison, the Executive Condominium primary market sales are relatively stable as the demand for EC units is partly driven by the rising prices of new condominium units, which made the prices of EC appear comparatively affordable.
(3) The current interest rate environment is not the main cause of the ailing housing demand.
Therefore, any decline in interest rates in the coming months would bring limited marginal push to homebuying demand.
(4) About 20 residential developments with a total of 7,500 units could potentially be launched in the next six to nine months. If all these 20 new projects are launched in the next six to nine months, it could give a shot in the arm to the property market.
(5) However, property developers are expected to continue their cautious stance and wait for the most opportune time to launch their projects, due to the relatively high land price at which they acquired the land of these 20 projects. Furthermore, two events could stretch out their wait into 2025.
(6) Hence, the number of private homes sold by developers in 2024 could range from 4,500 to 6,000 units, which would be the lowest annual housing sales since the global financial crisis of 2008.
Introduction
The month of June is normally one of the lull periods in the local property market as homebuyers utilise the 4-week school vacation go on overseas holidays. As a result, home-buying demand is usually lower in June. Hence, real estate developers released only 118 private housing units for sale last month, about half of the number of units released in May 2024.
No new residential projects were launched in this June. The 118 units released last month were from previously launched residential developments.
Executive Condominium primary market
Developers did not launch any new Executive Condominium (EC) projects in June as well. However, they managed to sell 50 EC units last month, which is within the 40 to 60 units sold monthly in the second quarter of this year. Executive Condominium is a hybrid semi-private housing with some public housing restrictions.
The demand for EC is partly driven by the rising prices of new condominium units, which made the prices of EC appear comparatively affordable.
Developers did not launch any new EC projects in 2Q 2024. The sole EC project at Bukit Batok named “Lumina Grand” was launched in 1Q 2024. Due to the lack of new EC project launch to draw in more buyers, the sales of EC units fell to 152 units in the second quarter of 2024, which was only one-third of the 449 units sold in 1Q 2024.
Low primary market housing demand in second quarter of 2024
Real estate developers launched 634 private housing units in the second quarter of this year, based on the latest monthly residential property primary market figures. It represents a 51.4% drop in housing launch volume quarter-over-quarter (qoq) in 2Q 2024.
It is also the lowest quarterly launch volume since 4Q 2022, when only 504 housing units were released then.
Source: Mogul.sg Research, URA
The low private housing launch volume contributed to the weak quarterly primary sales last quarter. Developers only sold 752 private residential units in 2Q 2024, which was a 35.4% qoq decline in sales. Moving in tandem with the launch volume, the primary market sales of private housing units in 2Q 2024 was also the lowest since 4Q 2022, when 690 units were sold by developers then.
Based on the preliminary numbers, developers sold 1,916 private housing units and 600 EC units in the first half of 2024. The primary residential property sales in this January to June period is the lowest volume for a half yearly period in the past three decades.
Effects of market cooling measures
The low launched and sales volume in the last quarter of 2022 was due to the poor market sentiments caused by the market cooling measures introduced at the end of September 2022.
Despite the absence of any new round of new cooling measures in the first half of 2024, the private residential primary market contracted in 2Q 2024 mainly due to the overall cautious mood in the property market and the long-term combined effect of the previous rounds of property curbs which are still in effect.
Interest rate is not the key determinant holding back home sales
The supposedly high interest rate climate is not the key determinant for the current low private housing sales volume. The local banks, such as DBS and UOB, are able to offer lower home mortgage rates to eligible borrowers than the foreign banks. This is because the local banks could draw on their pool of depositors’ savings which are wider than those of foreign banks, to finance their home mortgage packages.
The falling home sales would increase the competition among the banks for borrowers’ businesses. As a result, they are offering attractive home loan packages to homebuyers and those who wants to refinance their existing home loans, which will benefit borrowers.
The current interest rate environment is not the main cause of the ailing housing demand. Therefore, any decline in interest rates in the coming months would bring limited marginal push to homebuying demand.
Future residential launches and market outlook
Property developers, agents, financial institutions and those who profit from a high real estate transaction volume are looking forward to a brighter season in the second half of 2024. This scenario is quite possible, since the bar is set rather low in the first half of this year.
About 20 residential developments with a total of 7,500 units could potentially be launched in the next six to nine months. The combined size of these developments is significant, as they are about four times larger than the 1,938 units launched in the first half of 2024. The 7,500 units in the 20 projects are also about the same size as the 7,551 units that were launched in 2023.
If all these 20 new projects were launched in the next few months, it could give a shot in the arm to the property market.
However, property developers are expected to continue their cautious stance and wait for the most opportune time to launch their projects. This is because the land on which these projects sit were acquired more than a year ago, when land prices were generally higher. Therefore, the developers are reluctant to launch their projects in a market where demand is weak.
Furthermore, there are two events could stretch out the launch of these projects into 2025.
Firstly, the large HDB BTO exercise in this October with 14 projects which are mostly in convenient and attractive locations could compete with the private residential mass market for upgrader housing demand.
Secondly, the lull periods in the second half of this year, such as during the Ghost Month in August and the year-end school holidays could delay the launch of most of the 20 projects into 2025. Most developers would avoid launching their residential projects during these lull periods.
As a result, the private primary property sales volume may not improve significantly for the rest of this year. Hence, the number of private homes sold by developers in 2024 could range from 4,500 to 6,000 units, which would be the lowest annual housing sales since the global financial crisis of 2008.
During periods like these, taking a step back and recharging can be beneficial for both sellers and buyers. A day retreat can provide that mental clarity to rethink strategies or refocus on what truly matters. For sellers, it might offer the opportunity to come back with fresh ideas to attract buyers. And for buyers, it’s a chance to clear their minds and reassess priorities before making such a big investment decision. Sometimes, a pause is the best move forward.
The data you've shared highlights the challenges and cautious optimism in the property market. With the lowest number of private housing units launched since 2022, and developers taking a careful approach, it's clear that timing is crucial. Meanwhile, Executive Condominiums remain a stable option, driven by the rising prices of new condos. If you're considering renting during this fluctuating market, try to download app that offers detailed information on rental services in Singapore. Whether you're waiting for the right moment to buy or prefer the flexibility of renting, having access to reliable rental options can be a great advantage in these uncertain times.