PROPERTY INSIGHTS

Private home prices: Q3’s blip and positive signs

Leslie Yee

Published Tue, Oct 29, 2024 · 12:30 PM

With population growth, lower interest rates and stable supply, private home prices are not headed for a correction and are poised for steady growth instead, writes BT senior correspondent Leslie Yee. BT SCREENSHOT

This week in Property

Quarterly dip in private housing prices
Supply-demand dynamics driving support for private homes
Emerging weakness in the office property market
Buzz in Penang property

Q3’s dip in private home prices

The release of Q3 housing market data saw Housing Development Board (HDB) resale flat prices rise 2.7 per cent from the prior quarter amid a surge in transaction volume versus Q2 and year on year.

However, overall prices of private homes declined 0.7 per cent quarter on quarter in Q3 according to data from the Urban Redevelopment Authority (URA).

Could Q3’s price dip signal the end of the multi-year upcycle in private home prices and provide respite for a homebuyer who has been waiting on the sidelines to buy a home for owner occupation since the outbreak of the Covid-pandemic in early 2020?

Probably not. I argue in The Level Ground that with population growth, lower interest rates and stable supply, private home prices are not headed for a correction and are poised for steady growth instead. A local homebuyer eyeing a private home for owner occupation may need to bite the bullet and buy now.

Perhaps strong sales at major new condominium launches this month - Meyer Blue and Norwood Grand - are reviving the animal spirits among developers. The quiet residential en bloc market may be getting lively. UOL Group, Singapore Land Group and CapitaLand Development signed an option to acquire the 99-year leasehold Thomson View Condominium for S$810 million via a collective sale.

Meanwhile, the tender for an executive condominium (EC) site in Tampines Street 95 drew five bids, with the top bidder Sim Lian setting a new record for EC land with its offer of S$768 per square foot (psf) per plot ratio. Sim Lian’s S$465 million bid was 1.6 per cent higher than the next highest bidder.

Market watchers will be paying close attention to whether the positive take-up at new private home launches continues. MCL Land and Sinar Mas Land will start previews for their new 99-year leasehold Pine Grove project, Nava Grove, on Nov 2. Prices start at S$1.39 million or S$2,224 psf for two-bedders sized at about 624 square feet. Located in District 21, the project will have 552 units across three 24-storey towers.

Separately, the latest HDB Build-To-Order (BTO) exercise for October drew 35,678 applicants for the 8,573 new flats. Analysts said Plus and Prime projects were well received due to the attractive locations.

The BTO exercise saw 10,884 single applicants vying for the 1,902 units of two-room flexi rates, with nearly six applicants going after each such flat. At this launch, eligible singles could apply for two-room flexi flats in any location, whereas previously they could only apply for units in non-mature estates.

Weakness in office property market

Outside of the housing market, prices and rental rates for industrial properties in Singapore increased marginally in Q3 as compared with the quarter before, according to JTC’s latest data. The price index of industrial properties for Q3 rose 0.5 per cent versus the prior quarter and 2 per cent from the same period a year ago. Rentals across all industry properties increased by 0.3 per cent from Q2 and by 5 per cent from a year ago.

My colleague Kalpana Rashiwala reports there seems to be more buzz for big-ticket industrial properties in Singapore. For example, AEW is said to be selling Admirax, a seven-storey light industrial building in the Woodlands area, for about S$155 million to a family office. Also, an expression of interest exercise for Bendemeer Centre is reported to have drawn a handful of bids. The asking price for the property, which is owned by an entity controlled by Raymond Ng’s BS Capital, is S$145 million.

Signs of weakness appeared in URA’s Q3 office market data, especially for better-quality space. Office rents in Singapore’s central region fell 0.5 per cent in Q3 over the preceding quarter, contrasting with the 3.1 per cent quarterly increase in Q2. Islandwide, the stock of office space rose by 36,000 square metres of net lettable area in Q3, with the islandwide office vacancy rate increasing to 11 per cent as at end-Q3, from 10.8 per cent as at end-Q2.

On Oct 28, the manager of Starhill Global Real Estate Investment Trust announced the divestment of strata office lots at Wisma Atria for S$16.1 million, representing a premium of over 22 per cent to the property’s latest valuation.

Meanwhile, PGIM Real Estate and Elevate Capital Group revealed plans to rejuvenate Stamford Court at 61 Stamford Road into a “fresh living, co-working and lifestyle destination” following their S$132 million acquisition of the asset from Singapore Land.

Penang’s allure

Beyond Singapore, my colleague Tan Ai Leng reported on strong home-buying interest in Penang, Malaysia. For example, the recent launch of luxury condominium Lume by Eastern and Oriental, with price tags starting at RM2.2 million (S$667,385), drew strong take-up.

In Hong Kong, the number of new home transactions surged after Chief Executive John Lee’s policy address earlier this month. However, analysts expect the territory’s home sales uptick to struggle with momentum due to the weak economic outlook and still elevated interest rates.

Recently, a mansion in Hong Kong’s Repulse Bay was sold for HK$160 million (S$27.2 million), adding to a streak of distressed property disposals this year. The unit was used to back a HK$168 million loan taken out by Hong Kong firm Accufast from a moneylender, according to court documents.

In the US, existing home sales dropped to a 14-year low in September, likely as prospective buyers held out for lower mortgage rates, with house prices remaining elevated.

Last week, I was in Jakarta, Indonesia, after an absence of a number of years. I moderated a panel discussion about the potential and challenges for investors and startups in the property technology or proptech space at the Tech in Asia Conference, co-organised by The Business Times. Read more about it here.

Will strong take-up at new private home launches continue? Let me know your thoughts at lyee@sph.com.sg