Nicholas Spiro

The View | Calm down, Singapore’s housing market is not about to collapse

Evidence points to a slowdown in Singapore’s residential property market, but a normalisation of activity is being misconstrued as a crisis

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Cars go past residential buildings in Singapore on January 3, 2023. Assessment of the performance of Singapore’s residential property market must devote particular attention to the public housing system. Photo: Bloomberg

Nicholas Spiro

Published: 4:30pm, 5 Aug 2024Updated: 2:31am, 6 Aug 2024

For those who are not familiar with Singapore’s residential property sector, some of the recent headlines and data points paint a troubling picture of a market that is experiencing a steep downturn.

In the first half of this year, sales of new private homes fell to their lowest level for the first six months of a year since 2004, when the city state’s Urban Redevelopment Authority began compiling data. As OrangeTee notes, the number of transactions was even lower than in the first half of 2008, when the global financial crisis was beginning to erupt, as well as the first half of 2020 when the Covid-19 pandemic struck the world economy.

Prices of private properties, including executive condominiums, grew just 0.9 per cent on a quarterly basis in the second quarter. In the core central region, which bore the brunt of the government’s controversial decision last year to double additional stamp duties for foreigners buying properties to a staggering 60 per cent, prices of condominiums and flats contracted 0.3 per cent, the third quarterly decline in the last five quarters.

The rental market is also under pressure. Rents have fallen for three straight quarters, contracting 2.7 per cent in the first half of this year. In the luxury segment, Singapore was the worst-performing market in the first quarter of this year among 15 leading residential letting markets across the world tracked by Knight Frank.

Yet while these figures attest to a slowdown, they need to be put in context. First, sales of new homes have collapsed because developers are launching fewer projects. Launch volumes tend to go hand in hand with transaction activity in Singapore’s residential market. In the first half of this year, developers launched 1,938 private units, compared with 7,551 for the whole of 2023, according to data from property portal Mogul.sg.

Although homebuyers have become more price-sensitive and demand from Chinese buyers – a crucial source of foreign demand in the luxury market – has waned, “developers have been spoiled”, said Nicholas Mak, chief research officer at property portal Mogul.sg.