Singapore's real estate market experienced an unprecedented downturn in December, with new private home sales reaching a near-15-year low. Typically, the end of the year witnesses a lull in the real estate sector; however, December 2023 proved exceptionally challenging, as sales plummeted by 82.8% compared to November, according to data released by the Urban Redevelopment Authority (URA) on January 15.

Developers sold a mere 135 units last month, excluding executive condominiums (ECs). This marked the lowest figure recorded since January 2009 when only 108 units were sold during the global financial crisis.

Propertyforsale private residential sales transactions data revealed that in December The Continuum amd The Landmark were the two best-selling projects in the Rest of Central Region (RCR). Whereas in the suburban Outside Central Region (OCR) projects included The Myst and J’den.

The top-selling Core Central Region (CCR) projects in December 2023 were Midtown Modern and Watten House.

In November 2023, a total of 784 units were sold, making the drastic decline in December even more pronounced. On a year-on-year basis, new private home sales fell by 20.6% last month compared to December 2022's 170 units.

Factors Behind the Slump: Lack of New Launches and Year-End Holidays

Analysts attribute the market lull to a combination of factors, notably the year-end holidays and a shortage of major project launches during the period.

December is traditionally a quieter period in the real estate market, with a predictable decline in new home sales transactions. The festive season and the dearth of project launches diverted potential buyers' attention, as they were preoccupied with holiday plans or personal commitments.

A mere 36 new units were launched for sale in December, representing the second-lowest number since URA began releasing monthly data in July 2007.

In 2023, developers sold approximately 6,450 new private homes, excluding ECs, marking a significant 9.1% drop from 2022.

This is the lowest annual sales figure since 2008 when 4,264 units were sold, attributing the decline to various factors, including property cooling measures, a lack of project launches, macroeconomic uncertainty, and interest rate hikes in April 2023.

Impact of Government Measures: Additional Buyer's Stamp Duty (ABSD)

The government's announcement in April 2023 regarding an increase in the Additional Buyer's Stamp Duty (ABSD) for foreigners buying residential property had a notable impact. Foreign buyers faced a 60% ABSD, up from 30%, prompting a decrease in residential property purchases.

From January to May 2023, an estimated 235 residential property purchases by foreigners took place, decreasing to 80 transactions from June to December 2023.

Looking Ahead: A Rebound Is Not Imminent

Despite the challenging market conditions, analysts remain cautiously optimistic about the future.

The upcoming launches of major non-landed projects like Hillhaven and the Arcady at Boon Keng are scheduled before Chinese New Year. 

There will be more than 20 new projects to be launch in 2024, excluding ECs, potentially adding more than 10,000 new homes to Singapore's supply.

With an increase in supply and interest rate remain elevated, most property analysts predict that price appreciation will be slower.

Propertyforsale's managing director, JT Chia said that the buyers will be price sensitive and they would not be in a rush to enter the property market. 

According to Mr Chia, the Arcady at Boon Keng launch price of $2,400 PSF represents a 35 per cent premium to comparable freehold residential properties along Serangoon road.

The market remains dynamic, and the success of upcoming launches could play a pivotal role in shaping the trajectory of Singapore's real estate sector in 2024.