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Landed property prices dipped 4.9% in Q3. Is this a uno reverse moment?

News flash: landed property prices have taken a bit of a dip, down by 4.9% across the entire island. To give you some context, earlier this year, we kicked off with a modest 1.1% increase in Q1, and then things got more exciting with a healthy 5.9% boost in Q2. But now, in the most recent quarter, Q3, it seems like we've hit a bit of a speed bump with a price correction based on market transactions.

Now, the big question is: Is this the "uno reverse" moment that buyers have been hoping for? And, more importantly, what does this mean for you? We address these burning questions in the following video:

Why did prices of landed properties fall?

As per Raama's insights, there are several factors at play here. The Hungry Ghost Festival, observed in August and September, holds significant cultural weight. It's traditionally seen as an inauspicious time to purchase a new home in our lunar calendar. Additionally, the international news landscape has been rather gloomy, with hints of a technical recession and ongoing conflicts like the situation in Israel. This has dampened overall market sentiment, leaving people uncertain about whether this is the right time to make a significant decision.

Jackie points to another complicating factor - the rise in interest rates. Buyers had been hoping for some relief, but the feds have remained firm in their stance and might even raise interest rates further to combat inflation. Simultaneously, sellers are competing to outdo one another, each looking to secure the largest possible profit margin and set new records. This mismatch has led to a slight decline in demand. In his experience, calls and property viewings have slowed down, resulting in a somewhat subdued atmosphere in the real estate market.

My predictions for landed properties Q4

These factors undoubtedly extend the decision-making process for both buyers and sellers, but the landed property segment in Singapore has always been something of a trampoline. When it bounces back, we’re in for a remarkable resurgence.

Why is that so? Well, sellers of landed properties have a knack for one particular skill: holding their ground, literally. This trend isn't new to them, considering they've weathered the slowdown between 2013 and 2017. Brighter days seem to be on the horizon, and sellers are likely to maintain their optimistic outlook at this juncture.

So, the pivotal question arises: Is this the golden opportunity for buyers to step into the segment, or should they continue to wait on the sidelines? Is this the beginning of a significant reversal, or merely a temporary outcome influenced by the broader economic environment? Here are some key factors to weigh in your decision-making process.

Interest rates in Q4

The reality is that the feds aren’t showing any signs of lowering interest rates. In fact, the question of whether they might raise rates once more remains a mystery to be unveiled in November. As of our filming, banks are offering a fixed rate of 3.05%. Meanwhile, the floating 3-month SORA rate is fluctuating between 3.6-3.7%, with an added spread of about 0.5%. This puts buyers in a range of 4.2-4.4%. The difference between opting for a fixed or floating interest rate package translates to a substantial sum, ranging from S$1.2-1.4 million. It's a reasonable expense for those who opt for the predictability of a fixed rate, allowing them to manage their interest costs for at least two years. To be frank, buyers shouldn't hold their breath for property prices to return to what they were in years past, even as the market undergoes a correction. While some bystanders are waiting to see how things unfold, there will inevitably be buyers who believe that the current market trough is sufficiently low. These buyers will collectively contribute to a market shift that drives the index upwards once again. When that transformation occurs, those who held off their decisions in hopes of interest rates dropping will find themselves trailing behind.

Price movements in Q4

When asked whether they expect prices of landed properties to increase or decrease in Q4, both Raama and Jackie anticipate a marginal decrease. My perspective, however, is that sellers of landed properties are unlikely to yield and match the asking prices of hopeful buyers. Instead, they are more inclined to withdraw their listings from the market, shifting the supply-demand balance and eventually leading to an increase in prices. This stems from the fact that sellers of landed homes have the advantage and are in no rush to sell.

As a result, those who opt to hold off in the final quarter of the year may find themselves missing out. Traditionally, this is the slowest quarter, translating into reduced competition. By closely monitoring the market and identifying a seller who is content with their profit margin and simply wants to move on from their property, you could strike gold.

It's worth noting that despite the 4.9% decrease in Q3, the market has seen an overall uptrend over the past three quarters. As Raama astutely pointed out, when you compare per square foot prices between resale condominiums and new launches, the prices of landed properties in the same district consistently catch up to the latter. This trend is likely to persist as long as new condominium projects continue to be constructed, and Government Land Sales remain active. The recent dip, in this context, appears as a mere blip in the broader timeline.

How we can help

With our extensive experience as real estate professionals, we specialise in crafting mutually beneficial deals that provide buyers with a risk-free market exploration and enable sellers to secure a profit if they have concerns about a market downturn. Feel free to get in touch with me, Harvey Chia, for a casual chat at 91999141, with no obligation.


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