Why Singapore’s private residential market is expected to ‘surprise counterintuitively’

A new trend could have emerged in relation to the sizes of new sales units.

According to a Savills report, notwithstanding the global economic and business malaise, the private residential market in Singapore is expected to surprise counterintuitively.

“The 77% maiden launch sales of Chuan Park on the 10th of November was a project which reinforced our view of the demand drivers for new launch private residential properties. Prior to this launch, the first positive indications came from the success of 8@BT which saw over half of its 158 units sold on the first weekend of launch. Then came the equally successful Norwood Grand which saw 84% of its 348 units sold in the maiden launch,” the report said.

Here’s more from Savills:

Therefore, other than for projects such as Chuan Park, Norwood Grand and Union Square Residences which are already launched, the remaining ones in the RCR and OCR have very palatable unit sizes. The average total number of units per project is about 360. Given this information, we believe that new sales in Q4/2024 may be close to the 3,000-unit level, bringing the total for the year to about 6,000 units. However, this is still below 2023’s 6,421 units.

A new trend could have emerged in that the sizes of new sales units amongst 99-year non-landed projects has risen significantly. For the period January to September 2024, the median sizes of units sold in the 99-year leasehold market jumped to 926 sq ft. For the year 2014, 2018 and even as recently as 2023, the sizes were 764 sq ft, 743 sq ft and 764 sq ft respectively. This increase could have been borne out of the recent rise in HDB resale prices. From the end of 2020 till Q3/2024, HDB resale price rose by 39.5%.

In contrast, median new sale prices of non-landed properties in the RCR and OCR rose by 28.3% and 29.2%. This narrowing in prices between the public and private domains of the market is the likely factor that is motivating HDB upgraders to buy into new sale properties for living in.

This asymmetrical rate of price changes is likely to spawn greater upgrader demand from the HDB market for larger private homes in the coming quarters, replacing investment demand that often funnels into the 1- and 2-bedroom types for OCR launches. This incipient trend may be something for developers and architects to take note when they plan for their next project.

For 2024, we are maintaining our forecast for overall prices to remain flat with a slight upside bias. For 2025, we are forecasting prices to have a wider range, starting from -1% to +5%. The negative change could materialise because the lower land prices developers have paid since 2023 allowing them a buffer to adjust their launch prices to accommodate demand.

However, the +5% may turn out to be the case if HDB resale prices continue to rise sharply, and if an even greater number of Singaporeans, particularly the baby boomers and the earlier group of Generation Xs decide to plough their savings into property on behalf of their children.