The latest report by OrangeTee Research & Analytics reveals that private resale home prices remained stable in the third quarter of 2024 despite the prevailing high-interest rate environment. According to data from the Urban Redevelopment Authority (URA), the average resale prices for landed and non-landed private residential homes (excluding executive condos) held steady at $1,713 per square foot (psf) from the second quarter to the third quarter of 2024. However, there were some fluctuations in average resale prices across different regions.
The Core Central Region (CCR) saw a 1.6% increase in average resale prices from $2,145 psf in the second quarter to $2,181 psf in the third quarter of 2024. This is a reversal of the 3.6% decline seen in the second quarter. In the Rest of Central Region (RCR), there was a 1.4% increase in average resale prices, rising from $1,837 psf to $1,863 psf in the same period. This is a moderation from the 3.1% growth seen in the second quarter. On the other hand, the average price of resale homes in the Outside of Central Region (OCR) dropped by 0.4% from $1,495 psf to $1,489 psf in the third quarter, a turnaround from the 3.5% growth recorded in the second quarter.
Despite the fluctuation in prices, there was robust demand for resale homes. URA recorded a total of 3,860 resale homes sold in the third quarter, a 1.5% increase from the 3,802 units sold in the second quarter. Resale transactions accounted for 71.9% of the 5,372 residential sales (including new sales and subsale) in the third quarter, a decline from the 77.4% market share recorded in the second quarter, which was the highest on record. In the first nine months of 2024, a total of 10,351 resale homes were sold, reflecting a 21.8% year-on-year increase from the 8,498 units transacted in the same period in 2023.
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The increase in resale transactions can be attributed to the substantial increase in housing supply, with close to 30,000 private homes completed over the past two years. As the supply grows, it provides buyers with more options to choose from in the secondary market. Additionally, with new private home prices remaining high, buyers may turn to the resale market for more affordable options.
Recent launches in the OCR have shown a premium in prices compared to the average resale prices in the region. For instance, Norwood Grand, a new condo launched in October, has sold 293 units at an average price of $2,086 psf, which is 39.5% higher than the average resale price in the OCR. Similarly, Meyer Blue, a recent launch in the RCR, sold 122 units at an average price of $3,252 psf, which is 74.5% higher than the average resale price in the region.
The recent interest rate cuts by the US Federal Reserve may also spur luxury home sales as borrowing costs decrease. However, high-net-worth investors are less likely to base their purchase decisions on mortgage rates. But for buyers who have been cautious due to high interest rates, the lower rates may encourage them to enter the market.
Looking ahead, OrangeTee expects resale prices to continue growing in the next few years due to the projected decrease in supply. With an estimated 5,300 private homes to be completed in 2025, there will be a significant decrease from the 9,100 units expected to be completed this year. Barring any major economic crises or unforeseen circumstances, OrangeTee predicts positive prospects for resale homeowners.