Q1 luxury non-landed market slowed by 45.5% quarter-on-quarter: Huttons

MEASURES to cool the local property market led the luxury non-landed segment to slow down by 45.5 per cent quarter on quarter in Q1 2022 and 17.3 per cent year on year, said Huttons Asia in its latest report on the luxury and Good Class Bungalow (GCB) market released on Thursday (Apr 28). 

The December 2021 cooling measures, which increased the Additional Buyer’s Stamp Duty (ABSD) for multiple property purchases and foreigners, put a pause on some buyers’ plans to invest in Singapore, with a total of S$607.3 million invested in Q1, 49.3 per cent lower quarter on quarter and 43.2 per cent down year on year.

Interest in older luxury properties gathered pace in the quarter. The average age of completed luxury properties sold in Q1 was 19 years, compared with 14 years in the quarter prior. 

Huttons said buyers were looking towards some of these older properties for 3 reasons: larger unit sizes, a ready-to-move-in condition and better value. A freehold tenure adds to the allure of these older properties.

Apart from the pandemic shifting mindsets towards larger spaces to accommodate hybrid work and learning arrangements,  huge delays to home completions have also caused buyers to turn to the resale market to meet their immediate needs.

At the same time, drastic hikes in construction costs have directly impacted eventual sale prices, widening the gap between the price tags for new and resale properties. 

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But while resale condominiums do not face higher construction costs, maintenance, replacement and renovation costs can be hefty, the report noted. 

The GCB market, however, was “quite active” in the first quarter, with buyers unfazed by the recent cooling measures but volume restricted by the limited GCBs for sale, it said. 

“There was a surge in interest in the Raffles Park GCB area,” it said. “Six GCBs in Raffles Park were sold in Q1 2022 at an average price of S$2,163 per square foot (psf) on land compared with 3 sold in the last quarter of 2021 at an average price of S$1,917 psf on land.“

Going forward, Huttons expects the opening up of borders to boost the luxury market in the coming quarters. 

“There has been an increase in enquiries from Indonesian buyers since then. Global uncertainties have also elevated safe havens like Singapore as a prime location for investment properties.”

The GCB market will be constrained by the lack of supply in 2022. 

“The spike in prices has seen buyers shifting their focus to GCB areas where the prices are more palatable. Prices will continue to rise as demand remains strong."