Q4 Market Report: SG rental prices face downward pressure

SINGAPORE: In the final quarter of 2023, Singapore’s property market deals with economic changes, global uncertainties, and geopolitical tensions. As the country’s economy maintains stability amid challenges, the property sector grapples with cautious market sentiment influenced by economic slowdowns and geopolitical tensions.

On Thursday, Nov 16, PropertyGuru, Singapore’s No. 1 property marketplace with an 82% market share, recently released its Singapore Property Market Report Q4 2023. The report is based on data from over 600,000 property listings, providing valuable insights into the evolving dynamics of the real estate landscape.

Dipping Demand

Throughout 2023, there has been a gradual tapering in overall demand for properties, primarily driven by high interest rates and cooling measures. The Singapore Property Sale Demand Index, tracking the number of enquiries of all property sale listings on PropertyGuru Singapore, experienced a sharp decline of 14.4% quarter-on-quarter (QoQ) from Q2 2023 to Q3 2023, approaching pre-pandemic levels.

• Landed Homes Facing Steepest Drop: Landed homes, known for their higher quantum, faced the steepest demand drop, with the Sale Demand Index falling by 17.3% QoQ. This underscores the adaptability of property seekers to market conditions and regulatory changes.

Property Prices

The Singapore Property Sale Price Index, reflecting the median asking prices of all property sale listings on PropertyGuru Singapore, witnessed a decline of 1.8% QoQ from Q2 2023 to Q3 2023.

• Non-Landed Private Properties Experience Dip: Notably, listings for non-landed private properties registered the most significant dip in asking prices, declining by 1.4% during the same period.
• Landed Properties Holding Steadfast: However, high asking prices for landed properties remained steadfast despite a 0.9% QoQ decline in Q3 2023, potentially directing buyers towards more affordable alternatives.

Rental Market

In the rental market, Q3 2023 witnessed a slowdown attributed to the abatement of pandemic-induced demand pressures. The Singapore Property Rental Demand Index continued its decline, falling by 10.4% QoQ and reaching pre-pandemic levels.

• Landed Properties Witness Substantial Decline: Landed private properties witnessed the most substantial decline in rental prices, with the Rental Price Index decreasing by 7.6% QoQ.
• Non-Landed Properties Respond to Market Forces: On the other hand, the Rental Price Index for non-landed properties decreased by 4.0% from Q2 2023 to Q3 2023, highlighting diverse impacts on different property types.

Market Outlook

As Singapore approaches the final quarter of 2023, the property outlook remains uncertain, with high interest rates expected to persist. Dr Tan Tee Khoon, Country Manager – Singapore, PropertyGuru, comments, “Singapore’s household debt situation remains healthy. The number of foreclosures has also been trending down since 2021. Save for a few motivated sellers, most property owners have the financial muscle to hold out and are likely to remain firm on their asking prices. Hence, we could see a possible face-off between sellers and buyers in Q4 2023 and beyond – a waiting game to see who gives in first.

In a similar vein, rents are expected to hold up well despite rental growth having seen stabilisation. While we may see rent moderation, especially in the less sought-after locations, rental prices are unlikely to dip back to pre-pandemic days.”