Condo resale volumes drop 14% in December, prices continue to rise: SRX, 99.co

CONDOMINIUM resale transactions continued to fall for the third straight month in December 2022, as a seasonal lull and the year-end holidays resulted in fewer home viewings.

The number of condominium units resold dropped 14 per cent to 661 units, from 769 in November, according to flash figures from SRX and 99.co on Monday (Jan 30).

Cooling measures and a mismatch in price expectations between buyers and sellers could have also weighed on demand, said property analysts.

“Many buyers were expecting prices to moderate after the cooling measures, while sellers were holding firm to their asking prices,” said Christine Sun, senior vice-president of research and analytics at OrangeTee.

This resulted in fewer deals being sealed or deals taking longer to negotiate. 

Cooling measures, particularly the 15-month waiting period required for private homeowners who wish to buy a resale Housing and Development Board (HDB) flat after selling their condo, had also prompted some to shelve their decision to downgrade to HDB resale flats, noted property analysts from PropNex and ERA Realty. 

A NEWSLETTER FOR YOU

Tuesday, 12 pm

Property Insights

Get an exclusive analysis of real estate and property news in Singapore and beyond.

Sign Up

Furthermore, tight supply and escalating rents meant landlords had little incentive to sell properties generating attractive rental income, noted ERA Realty chief executive Marcus Chu.

Year on year, condo resale volumes further declined 49 per cent compared with a year ago, and were 25.1 per cent lower than the five-year average volumes for the month of December, SRX and 99.co said.

More than half (53.2 per cent) of the resale transactions occurred in the Outside Central Region (OCR), 30.3 per cent came from the Rest of Central Region (RCR) and 16.5 per cent took place in the Core Central Region (CCR). 

For the whole of 2022, estimated total condo resale volumes fell 26.1 per cent to 11,949 compared with the previous year.

Meanwhile, resale prices continued to rise on month, increasing 0.8 per cent, with OCR seeing the highest gain at 1 per cent, followed by 0.2 per cent and 0.6 per cent for the CCR and RCR respectively. 

Year on year, resale prices were up 9.7 per cent, with the OCR, RCR and CCR increasing 11.2 per cent, 8.4 per cent and 5.8 per cent respectively.

“Resale prices continued to increase as it plays catch-up with prices in the new sale market,” said Mark Yip, chief executive officer at Huttons Asia.

According to SRX and 99.co, the highest transacted price for a resale unit in December was S$13.8 million at Paterson Suites. In RCR, the most expensive condo resold was S$7.55 million for a Meyer House unit, while the highest transacted price in OCR was S$3.05 million for a Kovan Regency unit.

The overall median capital gain for resale condos in December was S$281,000, which was S$4,000 higher than November. District 21 (Clementi Park and Upper Bukit Timah) registered the highest median capital gain at S$895,000.

On the other hand, District 13 (MacPherson and Potong Pasir) posted the lowest at S$150,000.

The overall median unlevered return for resale condos was 25.8 per cent in December, with District 21 (Clementi Park and Upper Bukit Timah) posting the highest median unlevered return at 134.6 per cent. District 4 (Harbourfront and Telok Blangah) posted the lowest at 11.8 per cent.

SRX and 99.co calculated the capital gains and returns of a condo resale unit by comparing the current transacted price with the previous transacted price of the same unit. Districts with fewer than 10 matching transactions were excluded from the ranking.

Looking ahead, property analysts expect condo resale volumes to decline slightly as the increase in condominium units could help slow the pace of growth. Buyers are also expected to be more prudent due to economic uncertainties, high mortgage rates and cooling measures.

99 Group’s head of research Pow Ying Khuan said: “Supply and construction delays are improving with more units reaching temporary occupation permits, and developers are also expected to launch about 10,000 to 12,000 new units.” 

OrangeTee’s Sun believes the price expectation gap between buyers and sellers will widen in the near term, as most sellers are unwilling to adjust their selling prices. This is because the cost of living is rising, and many are gainfully employed. 

“Sellers may also find the replacement cost to be high since a new home is costly with prices of new and resale private homes still rising. On the other hand, higher mortgage rates and inflation are affecting buyers’ affordability,” she added.

Sun expects resale condo prices to rise by 5-8 per cent this year, down from the 8.7 per cent increase in 2022.

Huttons Asia’s Yip predicts the resale market slowing to an estimated 12,000 units in 2023 from 14,026 in 2022. This comes as rising interest rates and the tighter total debt servicing ratio limit cap the budgets of buyers.