August condo resale volumes were marginally lower as buyers awaited an interest rate

August condo resale volumes were marginally lower as buyers awaited an interest rate reduction: 99.co and SRX

August's overall median capital gain is S$357,000, down S$21,000 from July.

condosingapore.com
September 24, 2024

August saw a slight decline in condo resale volumes, which analysts ascribed to buyers holding out for a possible interest rate cut.

About 1,080 units were resold, which is 1.7% less than the 1,099 units that were sold in July, according to flash estimates from SRX and 99.co that were made public on Tuesday, September 24.

Volumes for the month of August were 5.2% higher than the five-year average volume and 16.8% higher year over year.

According to Luqman Hakim, chief data and analytics officer at 99.co, "this year is the first time that transaction volume is lower, even though August resale transaction volume has historically been slightly higher than July's since 2020."

He added that the drop coincides with a slight pessimism regarding the current state of private condo purchases and that prospective condo purchasers are holding off on making a purchase until interest rates have dropped.

Despite the Hungry Ghost Festival, some analysts noted that transaction volumes slightly decreased, suggesting that the market is still experiencing strong demand.

The resale volume has demonstrated "a notable increase" in comparison to the same period last year, according to Christine Sun, OrangeTee's chief researcher and strategist.

According to her, "this increase shows that there is still sustained demand for homes in the secondary market."

"Some potential buyers have chosen to purchase resale properties due to the significant price difference that still exists between new and resale properties."

The Outside Central Region (OCR) accounted for more than half (52.2%) of the transactions by region, followed by the Rest of Central Region (RCR) with 29.2% and the Core Central Region (CCR) with 18.5%.

Despite a minor decline of 0.1 index points from July, overall prices remained comparatively stable in August.

Overall prices increased 4.6% year over year from August 2023. At 7.2%, prices in the RCR saw the largest increase. The CCR and OCR saw price increases of 1.7% and 4.2%, respectively.

In contrast, sub-sale transactions accounted for 7.6% of all secondary sale transactions in August, a slight decrease of 0.7% from July.

Transactions involving secondary sales that took place prior to the project's completion are referred to as sub-sales.

The highest price ever paid for a resale unit at Nassim Mansion in August was S$12.1 million.

In August, the overall median capital gain was S$357,000, which was S$21,000 less than the previous month.

The largest median capital gain, S$720,000, was recorded in District 10 (Tanglin/Holland/Bukit Timah), while the lowest, S$81,000, was recorded in District 1 (Boat Quay/Raffles Place/Marina).

In August, the median unlevered return on resale condos was 30.7% overall.

District 1 (Boat Quay/Raffles Place/Marina) had the lowest median return, at negative 4.6%, while District 16 (Bedok/Upper East Coast) had the highest, at 45.3%.

Following interest rate reductions, analysts predicted that the resale condo market would probably see increased activity.

According to Mark Yip, CEO of Huttons Asia, a reduction in interest rates could make it possible for purchasers to be eligible for a larger loan and a lower monthly mortgage payment.

This implies that buyers who were previously hesitant because of loan limitations can now purchase their new residence. In 2024, resale condo prices could increase by 4% to 6%, he continued.

The head of research and market intelligence at ERA Singapore, Wong Shanting, also stated that further rate cuts by the US Federal Reserve, whether they occur now or in the future, could improve market sentiment in the future.

Sun of OrangeTee, however, pointed out that with new launches coming up, the resale market might see increased competition. "As many new apartments are anticipated to be unveiled in highly sought-after locations during the upcoming October sales launch, first-time homebuyers may consider public housing as an alternative, especially if they meet the income ceiling criteria," she said.