A 7% jump in suburban condo prices leads a 3.4% qoq rise in Singapore’s Q3 private home prices: URA

PRIVATE residential property prices rose 3.4 per cent in the third quarter, largely driven by strong sales at new launches in the suburbs which notched new benchmark prices, though price growth is expected to slow for the rest of the year.

For the first nine months of 2022, private residential home prices have increased 7.8 per cent, higher than the 5.3 per cent growth over the corresponding period last year. This follows the full-year increase of 10.6 per cent in 2021. Private home prices have risen 23 per cent since bottoming in Q1 2020, at the onset of the Covid-19 pandemic.

Flash estimates released by the Urban Redevelopment Authority (URA) on Monday (Oct 3) show a broad-based price growth across all segments in Q3, with a sharp jump in the non-landed segment, which went up 4.1 per cent quarter on quarter (qoq), while the landed segment rose 1.2 per cent qoq.

The increase in home prices was led by a 7 per cent qoq surge in non-landed home prices in the outside central region (OCR) – the fastest pace of price growth there since Q3 2009. This subindex had grown 2.1 per cent in the previous quarter.

Price growth in the OCR was helped by three major launches there last quarter — AMO Residence, Lentor Modern and Sky Eden@Bedok, all of which met with strong market response.

AMO Residence, Lentor Modern and Sky Eden@Bedok achieved an average price of around S$2,110 per square foot (psf), S$2,108 psf and S$2,118 psf respectively, and drove about 81 per cent of Q3 OCR new sales based on URA data as at Monday, said Wong Xian Yang, head of research, Singapore, at Cushman & Wakefield.

“This drove median OCR new sale non-landed prices to about S$2,092 psf in Q3, as compared to about S$1,774 psf in Q2,” said Wong, adding that the Q3 jump in OCR new sales prices is expected to be a one-off, as the aforementioned OCR projects have largely sold out.

According to Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, a total of 939 new non-landed homes in OCR were transacted at a median price of at least S$2,000 psf, of which 21 were above S$2,400 psf.

“Last quarter, the highest psf median price inked for a non-landed home in OCR was a 463 square foot (sq ft) freehold condominium sold for S$2,556 psf at The Gazania in Serangoon, followed by a 732 sq ft leasehold apartment transacted for S$2,513 psf at Lentor Modern in Lentor Central,” she said.

URA’s flash estimates follow the government’s introduction last week of new property cooling measures to ensure prudent borrowing and moderate demand, especially for public housing resale flats.

Consultants had said the tighter limits on property loans announced was widely expected and anticipate a slowdown in demand for private property, as affordability will be impacted.

As part of the latest cooling measures, private property owners now face a 15-month waiting period before they can purchase non-subsidised HDB resale flats. This is expected to impact mass market projects the most as this segment is most dependent on HDB upgraders who will now find it harder to profit from higher HDB resale prices.

Going forward, JLL’s senior director for research and consultancy, Ong Teck Hui, said the 0.5 percentage point increase in the floor interest rate used to assess potential homebuyers’ repayment ability may weed out highly leveraged buyers from the private home market, thereby leading to price momentum slowing in Q4.

Still, several analysts are projecting a growth in overall private residential prices of between 7 and 9 per cent for 2022 due to the low inventory of unsold new private homes, limited launches and tighter resale stock.

“Developers do not have that much room to reduce prices, in view of the higher construction cost, the high land cost for some sites and also seeing that many of them have relatively low unsold inventory,” said Ismail Gafoor, chief executive officer of PropNex Realty.

Leonard Tay, Knight Frank Singapore’s head of research, thinks 2022 will likely end with a 10 per cent price gain, because cooling measures notwithstanding, homebuyers still on the lookout for new homes under development and hoping to make a purchase before interest rates increase further, will likely continue to remain active.

New sales volume, however, is expected to decline significantly in Q4, says Tricia Song, CBRE’s head of research for South-east Asia.

“With most major new launches already concluded in the year, the December holiday seasonal lull and fresh residential property curbs, both homebuyers and developers are likely to adopt a wait-and-see approach in Q4 2022 to digest and ascertain the impact of the new measures,” said Song.

Analysts estimate around 8,000 new private homes could be sold this year, a marked 39 per cent drop from the 13,027 units in 2021, noted Song.

Launches of executive condominiums (EC), however, are likely to proceed, said Huttons Asia’s senior research director Lee Sze Teck.

He expects Copen Grand, the first EC launch in Tengah on Oct 22, to see healthy interest from buyers in Bukit Batok, Choa Chu Kang, Jurong East and Jurong West. This will be followed by another EC project, Tenet in December.

“Buyers of ECs can opt for the deferred payment scheme allowing them to ride out the current high interest rates,” he pointed out. “They can use the construction period to build up their savings to cover the lower loan limit.”

URA’s flash estimates also show a 2.5 per cent rise in condo prices in the rest of central region (RCR), which rose 6.4 per cent in Q2.

The core central region (CCR) subindex recorded a 2.3 per cent increase, compared to the 1.9 per cent rise in the previous quarter.

This came as some projects such as Hyll On Holland, Perfect Ten and Leedon Green moved more units at a higher average price during the quarter, observed PropNex. With home prices rising at a faster pace in the other submarkets, some buyers are finding value in the CCR market, particularly for freehold properties, it said.

Huttons’ Lee also noted the closing of the gap between prices in the RCR and those in the CCR.

“As of Q3 2022, the estimated median psf of new homes in the RCR stands at S$2,428, 13.5 per cent lower than the median psf in the CCR,” he said. “More buyers are purchasing homes in the CCR due to the narrowing price gap.”

Despite anticipating a 10 per cent price gain in overall private residential prices for 2022, Knight Frank’s Tay thinks the mix of cooling measures, a possible recession in 2023, widespread inflation and how private home prices have climbed in the last two-and-a-half years, will “inevitably start to take a toll and shift the sentiment of some homebuyers into tentative territory as interest rates progressively rise in each succeeding month from now and into 2023”.