Private Residential Resale Prices Hold Steady 3Q2024
The latest report by OrangeTee Research & Analytics has revealed that private resale home prices remain stable in the third quarter of 2024, despite the prevailing high-interest rate environment. According to data from the Urban Redevelopment Authority (URA), average resale prices for both landed and non-landed private residential homes, excluding executive condos (ECs), have remained unchanged 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 within the Core Central Region (CCR), Rest of Central Region (RCR) and Outside of Central Region (OCR).
In particular, average resale prices in the CCR have seen a 1.6% increase from $2,145 psf in the second quarter to $2,181 psf in the third quarter of 2024. This is a reversal from the 3.6% quarter-on-quarter (q-o-q) price drop recorded in the previous quarter. Similarly, prices in the RCR have also increased by 1.4% from $1,837 psf to $1,863 psf during the same period, which is a moderation from the 3.1% q-o-q price growth seen in the second quarter. On the other hand, the OCR saw a 0.4% decrease in average resale prices from $1,495 psf to $1,489 psf, marking a turnaround from the 3.5% growth seen in the second quarter of 2024.
Despite the high-interest rate environment, there has been robust demand for resale homes as URA recorded 3,860 units sold in the third quarter, a 1.5% q-o-q increase from the previous quarter. Resale transactions also made up 71.9% of a total of 5,372 residential sales, including new sales, resale, and subsale, in the third quarter of 2024. However, this marks a decline from the record-high market share of 77.4% in the second quarter, according to OrangeTee. In the first nine months of 2024, a total of 10,351 resale homes were sold, representing a 21.8% year-on-year (y-o-y) increase from the 8,498 units transacted in the same period in 2023. The market share of resale homes also saw a similar increase, growing from 57.8% of residential transactions in the first three quarters of 2023 to 71.3% of residential transactions over the same period this year.
OrangeTee attributes the robust demand for resale homes to the substantial increase in housing supply, with close to 30,000 private homes completed in the past two years. As the available supply expands, it offers more options for prospective buyers in the market. Additionally, with new private home prices remaining high, buyers may turn to the secondary market for more affordable options. For instance, Norwood Grand, a recently launched condo in the OCR, sold 293 units at an average price of $2,086 psf since its launch in October, representing a 39.5% premium over the average price of $1,495 psf in the region. A similar trend can be seen at Meyer Blue, a recently launched RCR project, which sold 122 units at an average price of $3,252 psf, a 74.5% increase over the average price of resale units in the RCR.
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With recent interest rate cuts by the US Federal Reserve, OrangeTee predicts that luxury home sales may see a boost due to the lower cost of borrowing. However, high-net-worth investors, who are less sensitive to interest rate fluctuations, are less likely to base their property purchase decisions on mortgage rates. Nevertheless, buyers who may have been cautious due to high interest rates may now be more inclined to enter the market. OrangeTee also expects resale prices to continue to grow in the next few years due to the projected decrease in available stock. While 9,100 units are expected to be completed this year, only 5,300 private homes are expected to be completed in 2025. Therefore, OrangeTee remains optimistic about the prospects for resale homeowners, barring any major economic crises or unforeseen circumstances.