S$2,000 psf benchmark for suburban private homes to persist: poll

REAL estate honchos expect S$2,000 per square foot to be the new benchmark price for private residential properties in the outside central region (OCR), according to poll findings by the National University of Singapore Real Estate (NUS+RE). 

And three out of five of survey respondents expect this price level to persist over the next one to two years.

For its Q3 2022 poll, NUS+RE sought the views of senior executives in Singapore’s real estate sector, including developers and financial institutions, on price growth of the private residential market in the OCR. NUS+RE represents the Institute of Real Estate and Urban Studies (IREUS) and the Department of Real Estate. 

The results come on the back of a fresh set of cooling measures aimed at stabilising an overheating property market. Meanwhile, the median price of launches in the OCR has surged beyond S$2,000 psf in recent months. In fact, based on data from the Urban Redevelopment Authority (URA), the proportion of new non-landed homes sold above S$2,000 psf had surged to 84.3 per cent in September, from 45.7 per cent in August. 

For instance, GuocoLand’s Lentor Modern was launched with a median pricing of S$2,108 in September, while Frasers Property’s Sky Eden@Bedok fetched a median price of S$2,118. 

URA’s figures also showed that the number of new non-landed homes sold above S$2,000 psf in the OCR shot up to to 550 units in September, from a monthly average of 35 units from January to June. 

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Despite these “elevated prices”, most survey respondents expect demand for private homes in the OCR to remain robust. More than half of the respondents also hold that HDB upgraders, who account for the bulk of this demand and will be “flush with cash from a strong HDB resale market”, will not be priced out of the private residential market in the OCR. 

Nearly nine in 10 believe that this is because buyers are willing to pay a premium for “good locational attributes” – such as proximity to good schools, shopping malls and transportation nodes – in OCR residences. 

Some 60 per cent of respondents attribute the high take-up rate to a limited supply of new launches in the OCR, while 46 per cent feel that buyers are locking in prices before interest rates rise any further. 

To rein in these skyrocketing prices, two in five of the survey respondents predict that the government will release more land for sale in the OCR. Around half of the respondents, on the other hand, do not expect developers to aggressively expand their land banks despite a potential increase in supply. 

Sing Tien Foo, director of IREUS, highlighted that developers may be cautious about over-extending their finances, given the current economic headwinds and “looming recession threat”. 

“Profit margins may be shrinking as interest rates and construction costs increase, which is another risk factor,” he said. 

Sing added that demand in the private residential market might fall as the government ramps up supply of public housing and offers new options such as the Prime Location Public Housing model.