According to a new report by OrangeTee Research & Analytics, private resale home prices have remained steady in the third quarter of 2024 despite the current high-interest rate environment. Data from the Urban Redevelopment Authority (URA) shows that the average resale prices for landed and non-landed private residential properties, 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 have been some fluctuations in average resale prices within the Core Central Region (CCR), Rest of Central Region (RCR), and Outside of Central Region (OCR).
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The report also reveals that average resale prices in the CCR have increased by 1.6% from $2,145 psf in the second quarter to $2,181 psf in the third quarter of 2024. This marks a partial reversal from the 3.6% quarter-on-quarter (q-o-q) price drop recorded in the first quarter and second quarter of 2024. Similarly, prices in the RCR have seen a growth of 1.4% from $1,837 psf to $1,863 psf during the same period. This is a moderation from the 3.1% q-o-q price growth seen in the previous quarter. On the other hand, the average price of private residential resale homes in the OCR has decreased by 0.4% from $1,495 psf to $1,489 psf in the third quarter, marking a turnaround from the 3.5% growth in resale prices seen in the second quarter.
Despite the high-interest rate environment, the demand for resale homes remains robust. In the third quarter, URA recorded 3,860 resale homes sold, representing a 1.5% q-o-q increase from the 3,802 units sold in the second quarter of 2024. Resale transactions also made up 71.9% of the total 5,372 residential sales, including new sales, resale, and subsale, in the third quarter. However, this is a decrease from the record high of 77.4% market share recorded in the second quarter. According to OrangeTee, this is due to an increase in housing supply, with close to 30,000 private homes completed in the past two years, providing more options for potential buyers. With new private home prices remaining high, some buyers may turn to the secondary market for more affordable options.
One example is the recently launched Norwood Grand condo in the OCR, which has sold 293 units at an average price of $2,086 psf since its launch in October – a 39.5% premium over the average price in the region. Similarly, the newly launched Meyer Blue in the RCR has sold 122 units at an average price of $3,252 psf in the same month, representing a 74.5% increase from the average resale unit price in the RCR. OrangeTee also predicts that recent interest rate cuts by the US Federal Reserve may spur luxury home sales due to lower borrowing costs.
The report also notes that buyers who may have been more cautious due to high interest rates may now be more inclined to enter the market. OrangeTee expects resale prices to continue to grow over the next few years due to a projected decrease in available stock. As there are only around 5,300 private homes expected to be completed in 2025, there is likely to be a shortage of supply, which may drive up resale prices. However, the report also states that this growth is subject to major economic crises or unforeseen circumstances. Overall, OrangeTee remains positive about the prospects for resale homeowners in the coming years.