Price expectation gap resulted in fewer condo resale deals: analysts

The condo resale price growth slowed down last month to 0.1%.

Property experts said last month’s slower price growth was due to a substantial price drop 2.6% in the prime segment, core central region.

OrangeTee said prices in the other market segments like the RCR and OCR continued to increase.

But last month’s price growth in RCR and OCR showed that many sellers were firm in their asking prices.

“The price expectation gap between buyers and sellers remains wide as some buyers may expect prices to moderate after April's cooling measures. This may have led to fewer deals being closed in recent months, which have come down from a high of 1,141 units in March 2023,” said OrangeTee.

Cooling measures

PropNex observed that the 15-month-wait-out period limits some private home owners to buying HDB resale flat upon sale of private property.

“The impact from the 15-month wait-out period, coupled with already limited resale stock have put a drag on condo resale transactions for most part since last September,” said PropNex.

The higher ABSD rate may also cause some owners of multiple homes to prefer not to sell their property, as it would be pricey to buy another residential property in the future should they choose to do so.  

“Furthermore, with the home leasing market still healthy, owners may opt to rent out their property for recurring income, rather than to sell them on the resale market,” added PropNex.

In relation to the cooling measures, Huttons said the Core Central Region (CCR) is taking the hit from the measures with prices down 2.6% in June. 

“This is the steepest fall in CCR prices in 3 years. The number of transactions $10 million and above plunged by 90% to 1 in Jun compared to 10 in May,” said Huttons.

School holidays

With many people travelling during the school holidays, Huttons found that there were lesser viewings thus leading to lower sales in June. 

OrangeTee echoed this, saying the slower sales were exacerbated last month as many buyers and sellers were overseas during the school holidays, resulting in fewer house viewings and fewer transactions being closed. 

Outlook

OrangeTee forecasts that the resale market may continue to face stiff competition as more new condo projects may be launched in the coming months. 

Some demand may be diverted to the primary market, especially first-time home buyers, it added. But it noted that certain market segments may continue to see sustained demand, such as large and affordable resale homes which are becoming rare in the market. 

PropNex anticipated that resale performance may improve in the second half of the year, as the market takes time to adjust to the cooling measures from April 2023. 

“With more supply completions coming up, we could also possibly see some resale deals being done as new projects obtain the temporary occupation permit (TOP),” it added.

For Huttons, the HDB resale market will continue to back the resale condo market in July. It also predicts more completion of non-landed homes in H2 2023. which may stabilise resale prices to around 8% in 2023.