Property price index grows at slower pace in Q1 2022 post-cooling measures: URA

AFTER a marginal increase in private home prices in Q1 2022, analysts say that the private residential market should stay relatively subdued in Q2 in the wake of the cooling measures and rising interest rates.

Still, demand for private homes from genuine homebuyers is expected to remain strong, with transaction volumes likely to pick up as more projects are launched for sale.

The overall price index for private homes in Singapore edged up 0.4 per cent in the first quarter of 2022 - up for the eighth consecutive quarter - but slowing significantly from the 5 per cent jump in Q4 2021 after the government rolled out property curbs in December. This is according to Urban Redevelopment Authority’s (URA) flash estimate released on Friday (Apr 1).

Aside from the property curbs, analysts also attributed the softer performance to a lack of launches, a lull arising from the Chinese New Year festivities, curtailed viewings after a spike in Covid-19 cases, higher interest rates as well as geopolitical headwinds.

Huttons estimates that developers launched just some 700 to 1,000 units in Q1 2022, a fraction of the 3,716 units in the corresponding quarter a year ago, while developers sold 1,800 units in Q1 2022, down roughly 49 per cent year on year. Meanwhile, ERA’s head of research, Nicholas Mak, calculates that 2,660 to 2,750 private residential units changed hands in the resale market in Q1 2022, which is 42 per cent to 44 per cent lower than Q4 2021.

Tricia Song, head of research (South-east Asia) at CBRE, expects demand in the housing market to remain “relatively subdued” in Q2 2022 as buyers digest the cooling measures, though sales volumes could gain traction as attractive projects hit the market. She added: “In the short term, the residential market could also benefit marginally from safe-haven flows, amid heightened geopolitical uncertainty associated with the ongoing Russia-Ukraine conflict.”

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Other analysts pointed out that the easing in safe management measures, along with the reopening of Singapore’s borders, should boost flows of foreign buyers and traffic at showflats.

CBRE’s Song projects that developers will move 9,000 to 10,000 new private homes this year, down from over 13,000 units in 2021, on the back of a limited pipeline of launches, while prices could remain flat or see slight gains of up to 3 per cent in 2022.

The slight increase in private home prices in Q1 2022 marked a departure from the last round of cooling measures in July 2018, which led to property prices dipping 0.1 per cent in Q4 2018. Huttons’ senior director (research) Lee Sze Teck said: “This is within expectations as the level of unsold stock in Q1 2022 remains at an extremely low level.” Huttons projects that the level of unsold stock as at end March stood at 13,000 units, or 9.3 per cent less than Q4 2021.

The increase in private home prices was led by the landed properties segment, which shrugged off the cooling measures to rise 4 per cent quarter-on-quarter after notching a 3.9 per cent increase in Q4 2021. Analysts say that the landed segment was supported by limited stock as well as transactions in the resale market, including Good Class Bungalows (GCB).

In addition, 107-unit freehold strata landed housing project Belgravia Ace, located off Ang Mo Kio, saw strong demand at launch. According to PropNex, 74 units were sold over launch weekend at an average price of S$4.4 million.

Knight Frank’s head of research, Leonard Tay, highlighted that the stock of landed properties has hovered around 73,000-plus units for the past 4 years and is not expected to expand significantly going forward. Tay said: “Landed homes in Singapore has been one of the top-performing asset classes in the real estate market due to its fixed supply, surpassing sales performances over the last decade.”

On the other hand, prices of non-landed properties retreated 0.6 per cent in Q1 2022, reversing from a 5.3 per cent gain in Q4 2021.

By region, prices of non-landed homes in the core central region (CCR), or prime areas, eased 0.5 per cent in Q1 2022 after increasing 2.7 per cent in Q4 2021. This comes as investors and foreign buyers, who generally zero in on luxury homes, bear the brunt of the cooling measures.

In the city fringe or rest of the central region (RCR), prices slid by a sharper 3 per cent quarter on quarter, after chalking up a sizzling 6.7 per cent gain in the previous 3 months.

Ong Teck Hui, senior director of research & consultancy at JLL, said: “The more significant correction in RCR non-landed prices could be due to the exuberant increase of 16.3 per cent in 2021, which far exceeded the overall index increase of 10.6 per cent for the year.”

According to Colliers’ head of research Catherine He, projects in the RCR, such as One Pearl Bank, were transacted at lower prices which could have also contributed to the pullback.

Supported by owner-occupiers, the suburbs bucked the trend however, with prices in the outside central region (OCR) rising 1.9 per cent in Q1 2022, albeit slower than the 5.7 per cent rise seen in Q4 2021.

Cushman & Wakefield’s head of research (Singapore) Wong Xian Yang noted that while volume of transactions in the OCR have declined, properties in the OCR could have benefited from the property curbs as investors priced out of the RCR market turned their focus to more affordable properties.

At the same time, supply remains tight. OrangeTee & Tie’s senior vice-president of research & analytics, Christine Sun, said: “New home supply is lacking in the suburban areas as there are very few mega launches in the OCR this year and the total unsold stock of launched projects continue to decline steadily every month.”

Projects poised for launch in Q2 include Qingjian Realty’s The Arden at Phoenix Road, Sing Holdings’ executive condominium North Gaia at Yishun Ave 9 and Piccadilly Grand at Northumberland Road.

“With rising inflation and higher construction cost, we anticipate prices of new launches to stay firm,” said Ismail Gafoor, chief executive of PropNex Realty.

The statistics will be updated on Apr 22 when the URA releases its full set of real estate statistics for the first quarter.

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