Lower-value private homes gain demand amidst affordability concerns

Homes priced below $2m accounted for 56.9% of sales in Q3.

Private homes priced below $2m are becoming a popular option for homebuyers increasingly worried about affordability.

In Q3, OrangeTee reported that the market share of private homes under $2m, excluding executive condominiums (ECs), increased from 56.9% in Q2 to 57.9%.

By contrast, sales of non-landed and landed homes, excluding ECs, priced at $5m or above, fell slightly from 273 units in Q2 2024 to 242 units in Q3 2024.

Additionally, transactions of private homes priced at $10m or more fell from 50 units to 36 units during the same period.

More homebuyers choosing lower-value properties have also led to a 0.7% QoQ decrease in private home prices.

"The price decline may be attributed to more consumers exhibiting greater caution in their purchasing decisions, as they were more restrained in their affordability due to the elevated cost of living and interest rates," OrangeTee said in a report.

"Others could have delayed their purchases in anticipation of further dips in interest rates," the expert added.

Price declines were also seen across the  Core Central Region (CCR), where average prices of private homes, excluding EC, dipped 0.6% YoY to $2,273 psf.

According to OrangeTee, if the Federal Reserve continues to reduce interest rates, buying sentiment is likely to improve as homes become more affordable.

This trend could encourage buyers to look at larger or high-end properties due to lower mortgage payments.

"Consequently, we may see rising interest in new property launches in the city fringe and prime locations," said OrangeTee.