Price gap narrows between RCR and CCR homes in March

THE price gap between new homes in the prime areas of Singapore and those outside of them continued to narrow in March, suggesting that there could be buying opportunities for those seeking properties in Districts 9, 10 and 11.

Median transaction prices for non-landed new private homes in the RCR and outside of central region (OCR) grew 4.8 per cent month on month to S$1.86 million, and 5.7 per cent to S$1.75 million, respectively. Meanwhile, that of the CCR (which includes Districts 9, 10, 11 and parts of 1, 2, 4, 6 and 7) fell by 4.9 per cent to S$2.24 million, according to Wong Siew Ying, head of research and content at PropNex Realty.

She added that the gap in median transaction prices between CCR and RCR homes has narrowed from 32.6 per cent in February to 20.3 per cent in March.

“With the cooling measures exerting more pressure on the CCR, prices of CCR units may remain soft, while RCR projects could see values inch up as unsold stock gets pared down or when new launches come on the market at benchmark prices. This narrowing of the price gap could present buying opportunities in CCR projects,” she said.

Leonard Tay, head of research at Knight Frank, added that the CCR makes up the largest proportion of unsold units, representing about 49 per cent of the combined “launched and unsold” and “ready to launch” units across all market segments.

The slower take-up of CCR units might also be due to lower volumes of foreign buyers. OrangeTee & Tie senior vice-president of research and analytics Christine Sun noted that the number of purchases by foreign buyers has been low since December's cooling measures, and expects this to remain muted in the near future.

That said, Tay noted that while some foreign buyers might be deterred by the recently increased Additional Buyer’s Stamp Duty (ABSD), others might still be interested in purchasing luxury homes in the CCR as prices have not seen much uptick.

“Given the amount of anecdotal interest and enquiries from potential foreign homebuyers, and the fact that the global pandemic has created a premium on stability in an uncertain world, the globally mobile wealthy may still be prepared to pay the 30 per cent ABSD as a premium for entry into Singapore’s prime residential market.”

He added that owner-occupiers, which will make up the bulk of home buyers in 2022, are generally unaffected by the ABSD. 

“In Q2 2022, underlying fundamental buyer demand is expected to re-establish itself, especially when a substantially-sized project that captures the public imagination is launched,” Tay said.

Despite the slow start to 2022, Tay expects pent-up demand and increased launches to drive sales this year.

For example, the 616-unit North Gaia EC at Yishun saw over 3,500 visitors during its preview weekend on Apr 9 and 10, an indicator of pent-up demand for homes in the area. 

Property consultants also expect to see healthy demand for Piccadilly Grand, which provides direct access to Farrer Park MRT. Scheduled to launch on May 7, the 407-unit project will offer 1 to 5-bedroom units.

According to real estate agents, Piccadilly Grand’s 1 and 2-bedroom flats have an estimated indicative price of between S$2,150 per square foot (psf) and S$2,400 psf. Meanwhile, its 3 to 5-bedders are expected to average at about S$2,000 psf.

Sun added that the upward adjustment of mortgage rates might spur some on-the-fence buyers to lock in home loans before they climb higher. 

“A steep hike in borrowing rates may price some upgraders out of the market,” she said.

The uptrend was seen last month, with 654 new private homes sold in March, climbing 20.7 per cent from 542 units in February.

The growth came as the Lunar New Year seasonal lull passed and safe-management measures were eased. Monday’s (Apr 18) data from the Urban Redevelopment Authority (URA) came in marginally higher than consultants’ estimated 651 units, published by The Business Times on Apr 11.

Including executive condominiums (ECs), which are a public-private housing hybrid, sales reached 702 units, a 22.3 per cent rise month on month.

That said, the lack of new major launches “continued to weigh on new home sales”, said PropNex’s Wong. Comparing year on year, last month’s sales were down 48.9 per cent from 1,373 units transacted in March 2021. Last month also saw just 309 units launched for sale, compared to the 959 new homes launched in the same period last year.

Most of the sales excluding ECs last month were in the rest of central region (RCR) (48.9 per cent), followed by the outside of central region (OCR) (27.7 per cent) and core central region (CCR) (23.4 per cent).

Despite lower CCR transactions, a freehold 1,121 square metre (sqm) unit at Les Maisons Nassim commanded the highest non-landed price last month at S$59.77 million. This is also the second-priciest new non-landed transaction (excluding bulk purchases) since 1995, Sun noted. The most expensive unit was a 1,122 sqm new condominium transacted for S$75 million in October 2021 at the same project.

“More condominiums were sold at higher price tags because there were more launches in the RCR and CCR in recent months. These homes tend to be sold at higher prices compared to the suburbs. Prices of homes have also been creeping up over the past year, driven by a shortage of supply,” Sun added.