SINGAPORE PROPERTY

Central-region condos drive Singapore's private home prices to all-time high

Singapore

PRICES of new private homes in Singapore rose 2.1 per cent in Q4 2020 from Q3, marking their steepest quarterly increase in over two years.

For the whole of 2020, the price index was up 2.2 per cent, a tad slower than the 2.7 per cent increase in 2019, the final figures released by the Urban Redevelopment Authority (URA) indicated on Friday. This week, Deputy Prime Minister Heng Swee Keat had said the government is paying "close attention" to the local property market "to ensure that it remains stable".

Private home prices are now 1.6 per cent above their all-time peak in Q3 2013 and 4.9 per cent higher than their most recent peak in Q3 2018, noted Colliers International research head Tricia Song.

The latest quarterly uptrend was mainly driven by non-landed properties in the rest of central region (RCR) and core central region (CCR).

Prices of non-landed homes in the RCR or city fringe sped up their increase to 4.4 per cent, after a 2.5 per cent growth in the previous three months. PropNex's head of research and content, Wong Siew Ying, noted that new launches such as The Linq @ Beauty World and The Landmark helped prop up prices in the area.

In the CCR, non-landed home prices climbed 3.2 per cent, reversing the 3.8 per cent decline in Q3, likely supported by higher median prices at previously launched projects, Ms Wong said.

Non-landed homes in the outside central region (OCR) or suburbs booked a 1.8 per cent price increase, slightly faster than the 1.7 per cent gain in the previous quarter. Clavon and Ki Residences At Brookvale, both launched in December, helped to spur growth in this mass-market region, Ms Wong noted.

Median prices in Q4 were S$1,637 per square foot (psf) at Clavon and S$1,766 psf at Ki Residences, higher than the OCR median price of S$1,632 psf.

Christine Sun, OrangeTee & Tie's head of research and analytics, said the overall uptrend was expected, given that many projects raised their selling prices last quarter.

For the whole of last year, non-landed homes' overall prices grew 2.5 per cent, faster than the 1.9 per cent rise in 2019. The prices of landed homes rose 1.2 per cent in 2020 but fell 1.6 per cent in Q4. (see amendment note)

ERA head of research and consultancy Nicholas Mak noted that when the total debt servicing ratio was introduced in June 2013, private housing prices contracted from Q3 2013 to Q2 2017. It took until Q4 2020 - more than seven years - for private home prices to recoup the losses triggered by government intervention, he wrote.

Developers sold 2,603 new private homes in Q4. (The number excludes executive condominiums or ECs, a private-public housing hybrid.) That is 26 per cent lower than the 3,517 units moved in Q3.

Despite the quarter-on-quarter drop, the latest figure was the best performance for the October-December period since 2012, when 4,353 units were sold in the primary market, said ERA. Before the pandemic, November and December - when people were away on vacation - were typically a lull period in real estate.

Year on year, Q4's transaction volume expanded 6.5 per cent. CBRE South-east Asia research head Desmond Sim noted the renewed positive sentiment was boosted by robust take-up of newly launched, well-located and relatively affordable projects. Low interest rates also beefed up investors' purchasing power.

The full-year tally for developers' new home sales, excluding ECs, stood at 9,982 units for 2020, up from 9,912 in 2019. Ms Sun described last year's demand as "surprisingly vibrant", amid Covid-19 lockdowns and travel restrictions.

On the EC front, developers made fewer sales in the fourth quarter (133 units) than in the third (164 units) last year. In 2020, developers sold 958 EC units, almost double the 505 sold in the year prior.

Colliers' Ms Song expects private housing prices to rise 3-5 per cent this year, tracking the economy's growth. "The positive momentum of the sales and price index could continue in 2021, but the spectre of more cooling measures - if prices outpace economic fundamentals - is likely to temper that momentum," she said.

Supply in the pipeline - that is, new development or redevelopment projects with planning approvals - continued to dwindle. A total of 26,426 units (including ECs) with planning approvals were unsold at end-December, shrinking from 28,727 at end-September and 32,272 a year ago.

This year, the market may swing back in favour of sellers as housing stock is depleting amid robust demand and a drastic decline in land sales in recent years, Ms Sun said.

CBRE's Mr Sim, referring to this year's slate of launches, said their locations in CCR and RCR may limit their buyer pools and thus slightly lower the market's overall volume of new private home sales for 2021 to about 8,000-9,000 units.

Amendment note: An earlier version of this article incorrectly stated that prices of non-landed homes in 2020 grew 2.2 per cent, slower than the 2.7 per cent rise in 2019. They in fact grew 2.5 per cent in 2020, faster than the 1.9 per cent rise in the previous year.

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