Singapore Q2 private home prices up 3.2% on 6% jump in city-fringe condos: URA

AFTER rising 3.2 per cent quarter on quarter in Q2 propped by 2 successful property launches in the city-fringe at record prices, the official overall private home price index is expected to continue to be in positive territory for the rest of the year.

Property consultants see the impetus for further price gains in Q3 to come from the suburbs, where a slew of launches are expected, including AMO Residence, Seneca Residence, Lentor Modern and The Arden.

Savills Singapore executive director Alan Cheong said: “There is inflation in the system from rising construction costs and land prices.”

JLL senior director of research and consultancy Ong Teck Hui said: “There is a trend towards more optimistic pricing of new launches and higher asking prices in the resale market due to the undersupply caused by the low inventory of unsold units.”

The number of uncompleted, unsold private housing units has fallen to 14,087 units as at end-Q1 2022 — less than half the recent high of 36,839 units as at end-Q1 2019.

However with the rapid rise in interest rates expected to lead to buyers becoming more cautious, the momentum of the price increase seen in the second quarter may not be sustainable, Ong said.

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Agreeing, Savills’ Cheong, also noted that “rising mortgage rates will pour cold water on sentiment, even for the category of buyers not facing affordability issues”.

CBRE head of research for South-east Asia Tricia Song noted that macroeconomic uncertainty may also deter potential home buyers.

The Urban Redevelopment Authority’s (URA) Q2 flash estimate for its overall price index for private homes released on Friday (Jul 1) is up 3.9 per cent from Q4 last year. This follows 2021’s full-year increase of 10.6 per cent. “Private home prices have risen 18.6 per cent since bottoming in Q1 2020, at the onset of Covid,” noted Song,

For the whole of this year, property consultants generally expect URA’s index to increase between 5 per cent and 10 per cent.

Most of them were not surprised by the 3.2 per cent qoq increase in URA’s overall index in Q2, which comes after a muted 0.7 per cent rise in the previous quarter amid a pullback in activity following the December cooling measures which also resulted in a dearth of new launches.

“The stronger price gain in Q2 was largely due to strong sales at Piccadilly Grand next to Farrer Park MRT station and LIV@MB in the Mountbatten area. Both were launched at record prices for 99-year leasehold properties in their respective locales,” said Savills’ Cheong.

As a result, URA’s price index for non-landed homes in the city-fringe or Rest of Central Region (RCR) shot up 6 per cent qoq in Q2; in contrast, this subindex shrank 2.7 per cent in the previous quarter.

URA’s flash estimate also shows that non-landed private home prices in the suburbs or outside central region (OCR) moved up 1.7 per cent in Q2, after rising 2.2 per cent in the previous quarter.

Non-landed prices in the prime areas or core central region (CCR) rose 1.6 per cent in Q2, after dipping 0.1 per cent in the previous quarter. Demand for properties in the CCR has benefitted from the opening of borders which is resulting in the return of foreign buyers, noted Huttons Asia senior director of research, Lee Sze Teck.

In similar vein, Knight Frank Singapore research head Leonard Tay said: “High-net-worth individuals from around Asia are looking towards Singapore for private home investment opportunities, including luxury properties in prime areas, despite the increased ABSD for foreigners.”

An industry observer who declined to be named highlighted that “there is a lot of hot money in the Singapore property market from foreign buyers who are impervious to interest rate hikes”.

“Their main reasons are for buying property here are non-economic in nature; it is more to preserve their capital.”

The URA also said that prices of landed properties rose 2.9 per cent qoq in Q2, after climbing 4.2 per cent in the previous quarter.

Summing up, ERA Realty Network’s head of research and consultancy, Nicholas Mak, said: “The Q2 2022 flash estimates illustrate that the housing market has shucked off the cooling effects from last December’s property curbs. This is mainly due to the strong demand for new residential projects.”

Despite the headwinds from rising mortgage rates and the risks of a looming economic slowdown, property developers are unlikely to lower the prices of their upcoming residential launches due to the rising land prices, construction expenses and financing costs, he added.