The private home market experienced a significant slowdown in December, with new home sales plunging to a 10-month low. This decline marked a stark contrast to the impressive figures seen in November, largely driven by limited launch activity and macroeconomic uncertainties. Let’s break down the key reasons behind this slump.

1. Fewer New Launches and Strategic Delays by Developers

The most immediate reason for the slump in December was the drastic reduction in new project launches. Developers introduced just 20 units, compared to a staggering 2,871 units in November, representing a 99% drop in launch activity.

Why did developers hold back?

Seasonal Timing: The holiday season is traditionally slower in terms of buyer activity. Developers often avoid launching new projects during this period to maximize visibility and capitalize on higher footfall in the months leading up to Chinese New Year.
Strategic Supply Management: With a significant pipeline of approximately 14,000 units set to launch in 2025, developers are pacing their launches to maintain demand-supply balance and avoid oversaturating the market.

However, this decision to hold back launches left buyers with fewer choices in December, leading to the sales of just 203 private homes, a significant decline from the 2,560 units transacted in November.

2. Impact of High-Interest Rates and Economic Uncertainty

Economic uncertainty and elevated interest rates also played a significant role in dampening buyer confidence:

Interest Rate Pressures: Although mortgage rates eased slightly following the U.S. Federal Reserve’s pause in rate hikes, they remained high by historical standards. Many buyers remained cautious about locking in loans at these levels, especially for higher-priced units.
Geopolitical and Economic Risks: Potential geopolitical tensions and changes in U.S. monetary policy added further uncertainty. Buyers, wary of the macroeconomic environment, opted to wait and watch instead of committing to significant purchases during this period.

3. Increasingly Selective Buyer Behavior

Another key factor in the slower sales was the increasing selectiveness of buyers:

Focus on Affordability: Buyers showed a strong preference for attractively priced units, particularly in competitive regions. Projects like One Bernam responded by slashing prices by up to 27%, successfully clearing 99% of its 351 units.
Preference for New Launches: New launches often generate buzz and attract higher demand due to their modern facilities, better layouts, and developer incentives. With few such options available in December, the market saw lower activity.

Analysts noted that even with ample supply expected in 2025, affordability will remain a critical factor driving demand. This is especially relevant for HDB upgraders, who often form a large pool of buyers in the private home market.

4. Positive Long-Term Market Outlook

Despite the December slowdown, industry experts remain optimistic about the private property market's resilience:

Healthy Sales Volume in 2024 and 2025: According to the Urban Redevelopment Authority (URA), 6,560 units are expected to be sold in 2024, a marginal increase from 2023’s 6,421 units. The supply of up to 14,000 new units in 2025 is nearly double that of 2024’s levels, reflecting developers’ confidence in future demand.
Pent-Up Demand: Lower mortgage rates, improved economic stability, and demand from HDB upgraders are expected to drive future sales. For example, projects like The Orie and Bagnall Haus have already generated significant interest ahead of their launches.

This optimistic outlook suggests that December’s dip may only be a temporary blip in an otherwise stable market.

5. Tight Supply in the Executive Condominium (EC) Market

The Executive Condominium (EC) segment also contributed to the slowdown, as no new EC projects were launched in December.

Limited Unsold Stock: By the end of December, there were just 160 unsold EC units, a tight supply compared to robust demand from buyers.
Upcoming EC Projects: Upcoming developments like Aureole at Tampines, set to launch in 2025, are expected to reinvigorate the EC market and help meet demand from families looking for affordable housing with private property features.

Despite limited supply, the median transacted price of new ECs remained stable at $1.47 million, slightly down from November’s $1.56 million. This indicates strong resilience in the EC market despite the broader sales slowdown.

6. Market Recovery and Growth Potential

Industry leaders are optimistic about recovery, as reflected in strong preview turnout for upcoming projects like The Orie. According to ERA Chief Executive Marcus Chu, this project witnessed exceptional interest due to its positioning as Toa Payoh’s first major launch in nine years.

In addition, projects launched in 2024 and beyond will benefit from:

Moderated Interest Rates: A stabilized interest rate environment will likely encourage buyers to re-enter the market.
Steady Demand for Resale Units: With rising prices in the resale market, more buyers may consider purchasing new units directly from developers.

Conclusion: A Temporary Slowdown, Not a Decline

December’s private home sales slowdown highlights the seasonal and strategic factors at play rather than a systemic issue. Limited launches, buyer caution due to high interest rates, and selective behavior all contributed to the dip. However, the strong pipeline of launches in 2025, coupled with pent-up demand and stable household finances, signals a healthy outlook for the market.

As developers roll out new projects in 2025 and beyond, affordability, location, and value will remain key drivers of buyer interest. For now, the December dip serves as a reminder of how critical timing and market dynamics are in shaping sales trends in Singapore’s ever-evolving property landscape.

Why December Private Home Sales Declined: Key Factors at Play