PRICES of private homes in Singapore accelerated in the first quarter of 2023, growing 3.2 per cent over the previous three months on lower sales volume, according to the Urban Redevelopment Authority’s (URA) flash estimates on Monday (Apr 3). 

This follows a marginal 0.4 per cent increase in Q4 of last year. It also comes after several major launches in the past quarter and a subsequent surge in sales for new private homes at fresh benchmark prices, despite mounting economic headwinds, analysts said. 

URA data showed that prices climbed 11.3 per cent year on year, as sale transaction volume dropped by around 8 per cent quarter on quarter, and by about 38 per cent year on year in Q1, said Christine Sun, OrangeTee & Tie senior vice-president of research and analytics.

Overall, prices of non-landed private residential properties grew 2.5 per cent quarter on quarter, after edging up 0.3 per cent in the prior quarter. 

Prices of non-landed homes in the city-fringe or Rest of Central Region (RCR) spiked by 4 per cent, after rising 3.1 per cent in Q4. Those in the suburbs or Outside Central Region (OCR) rose 1.9 per cent, swinging from a 2.6 per cent decline in the preceding three months. 

In the prime Core Central Region (CCR), prices went up 1 per cent, compared with the 0.7 per cent increase previously. 

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Data from URA Realis showed that new homes, excluding executive condominiums (ECs), accounted for 33.4 per cent of total sales in Q1, up from 18.9 per cent in Q4 last year. Resales made for 62.4 per cent of all transactions this quarter, down from 76.1 per cent previously. 

The launch of Terra Hill in February set a new benchmark price of S$2,650 per square feet (psf) in the Pasir Panjang neighbourhood and drove price movements in the RCR, said Knight Frank head of research Leonard Tay. 

The project sold more than a third of its 102 units at its launch.

Similarly, the launches of Sceneca Residence in Tanah Merah and The Botany at Dairy Farm recorded new benchmark prices of S$2,072 psf and S$2,070 psf in their respective locations in the OCR, said Tay. 

Tay observed that the land prices paid for acquiring development parcels over the past 12 to 18 months made it “inevitable” that the resulting new project pricing would reach new levels.  

Prices of landed private homes rose by a marked 5.7 per cent quarter on quarter in Q1, compared with an increase of 0.6 per cent previously. Catherine He, head of research for Colliers in Singapore put that down to sales at the Pollen Collection, where pricing went up 18 per cent to S$2,196 psf from Q4 2022, when the 99-year landed project was launched.

OrangeTee & Tie’s Sun highlighted that there was also a higher proportion of pricier homes sold in Q1. 

Around 40 per cent of all transactions, excluding ECs, were for private homes costing at least S$2 million, from 37.9 per cent in the previous quarter. And 282 properties were sold for at least S$5 million, up 19.5 per cent from 236 transactions in Q4. 

Of this, 26 private homes were sold for at least S$15 million last quarter. These include a 6,286 sq ft unit at the ultra-luxury freehold condominium Les Maisons Nassim for S$36 million or S$5,727 psf in February, as well as a 25,683 sq ft bungalow at 61 Wilkinson Road for S$55.5 million or S$2,161 psf in January. 

Huttons senior research director Lee Sze Teck pointed out that home prices were also likely boosted by a return of foreign buyers, with many luxury units in the CCR picked up by mainland Chinese buyers in January and February as border restrictions eased. 

Based on caveats lodged as at Mar 31, around 127 new homes were purchased by foreign buyers – 16.5 per cent more than the previous quarter’s 109 units. 

Projects favoured by these buyers were high-end condos in prime districts – Riviere at Jiak Kim Street, with 21 units sold; Klimt Cairnhill in the Orchard vicinity, with 20 units sold; and Perfect Ten along Bukit Timah Road, with 10 units sold. 

Analysts expect prices to continue rising, albeit at a slower pace, especially with more launches on the horizon. 

These include the 638-unit Tembusu Grand in Marine Parade, the 807-unit The Continuum at Thiam Siew Avenue, the 598-unit Lentor Hill Residences, and the 740-unit The Reserve Residences at Jalan Anak Bukit. 

“The performance of these projects would provide a clearer indication of underlying homebuyer appetite,” said Tricia Song, CBRE head of research at South-east Asia. 

Still, prices are unlikely to correct since developers continue to face higher land, construction, financing and labour costs, said ERA Realty key executive officer Eugene Lim. 

A stable job market, rising rents and sustained demand from HDB upgraders will also support underlying demand, said Wong Xian Yang, Cushman & Wakefield head of research in Singapore and South-east Asia. 

He predicts a 3 to 5 per cent increase in prices for the whole of 2023, compared to 2022’s 8.6 per cent growth. 

The Q1 2023 price growth “surprised on the upside”, said PropNex Realty chief executive officer Ismail Gafoor, “and we anticipate prices could see a more measured increase in the next few quarters as uncertainties still abound in the market”.

Longtime industry observer Nicholas Mak pointed out that private residential demand may be dampened this year by still-high interest rates, a slowing HDB resale market, and a flood of completions in built-to-order public homes in 2023. 

Lam Chern Woon, Edmund Tie head of research and consulting, cautioned that buyers should continue exercising prudence and can afford to wait, given the numerous projects to be launched this year.

Owners are currently not under pressure to sell as high rental yields can compensate for higher mortgage payments, noted Professor Cristian Badarinza, associate professor, Department of Real Estate, NUS Business School.

“All eyes are therefore on the dynamics of rental prices. If they remain elevated, the current equilibrium can hold steady. If they decrease, selling pressure may start to emerge,” said Prof Badarinza.

The flash estimates will be updated on Apr 28, when URA releases its full set of property market data for Q1.