According to a recent report by OrangeTee Research & Analytics, private resale home prices in 3Q2024 remained stable despite the high-interest rate environment. URA records showed that the average resale prices for both landed and non-landed private residential homes, excluding executive condos (ECs), stayed unchanged at $1,713 psf from the previous quarter.
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However, there was some fluctuation in average resale prices across the three regions – Core Central Region (CCR), Rest of Central Region (RCR), and Outside of Central Region (OCR). In the CCR, there was a 1.6% increase from $2,145 psf in 2Q2024 to $2,181 psf in 3Q2024. This partially reversed the 3.6% decrease seen in the previous quarter. The RCR also saw an increase in average resale prices, growing by 1.4% from $1,837 psf to $1,863 psf. This was a moderation from the 3.1% growth in the previous quarter. On the other hand, the average resale prices in the OCR dropped by 0.4% from $1,495 psf to $1,489 psf, a turnaround from the 3.5% increase seen in the previous quarter.
Despite these fluctuations, there was still a robust demand for resale homes as seen in the volume of transactions. URA recorded 3,860 resale homes sold in 3Q2024, a 1.5% increase from the previous quarter. This accounted for 71.9% of a total of 5,372 residential sales (including new sales, resale, and subsale) in the same quarter. However, this is a decrease from the market share of 77.4% recorded in 2Q2024, which was the highest on record. OrangeTee attributes this robust demand to the substantial increase in housing supply, with close to 30,000 private homes completed in the past two years. This widened the range of housing options for potential buyers, leading to an increase in resale transactions.
The report also notes that buyers may be turning to the secondary market for lower-cost private housing as new private home prices remain high. This is evident in the recent launches of Norwood Grand and Meyer Blue, with average prices of $2,086 psf and $3,252 psf, respectively, representing significant premiums above the average prices of resale units in their respective regions.
Furthermore, the recent interest rate cuts by the US Federal Reserve may also spur luxury home sales as it reduces the cost of borrowing. However, high-net-worth investors may not be as sensitive to interest rate fluctuations and are less likely to base their property purchase decisions on mortgage rates. Nonetheless, with interest rates lowered, buyers who were previously cautious may now be more inclined to enter the market.
Looking ahead, OrangeTee predicts that resale prices will continue to grow in the next few years as the available stock is projected to decrease. With approximately 5,300 private homes expected to be completed in 2025, there will be a significant increase from the 9,100 units expected to be completed this year. Barring any major economic crises or unforeseen circumstances, OrangeTee expects positive prospects for resale homeowners.