Singapore private home prices rise 3.3% in Q1 on 'extremely strong' demand

Fiona Lam

Published Fri, Apr 23, 2021 · 09:25 AM

PRICES of private residential properties across Singapore increased quarter on quarter by 3.3 per cent in Q1 2021, steeper than the 2.1 per cent growth in Q4 2020, according to the final figures released by the Urban Redevelopment Authority (URA) on Friday.

This is stronger than the flash estimates put out on April 1, with estimates then reflecting a 2.9 per cent gain in Q1 from the previous quarter. Analysts had said then that a stronger price surge could be captured when full figures for March are in.

The uptrend has lasted four consecutive quarters, and the 3.3 per cent figure marks the biggest quarterly rise since Q2 2018, said OrangeTee & Tie senior vice-president of research and analytics, Christine Sun.

“A combination of strong domestic demand for private home ownership and the resurgence of foreign investment demand has pushed home prices higher last quarter,” Ms Sun added.

Huttons Asia research director Lee Sze Teck described the demand for properties as “extremely strong” in the first three months of this year.

Partly fuelling the overall price increase was a 6.7 per cent jump for landed properties in the January-March period this year, which more than reversed the 1.6 per cent drop in October-December last year.

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This was supported by the growing demand for more spacious homes, as well as rising condominium prices, which made landed housing appear to be “value for money”, said ERA Realty head of research and consultancy Nicholas Mak.

Non-landed private homes became 2.5 per cent pricier in the first quarter of 2021, a tad slower than the 3 per cent rise in the fourth quarter last year.

The rest of central region (RCR), or city fringe, continued to see the largest increase in non-landed properties' prices. They climbed 6.1 per cent, speeding up from the 4.4 per cent growth in Q4 2020.

The RCR segment’s growth was likely driven by strong sales for Normanton Park and The Reef at King’s Dock, both launched in Q1 2021, said PropertyGuru Singapore country manager Tan Tee Khoon.

Non-landed homes in the outside central region (OCR) or suburbs booked a 1.1 per cent price increase, slightly slower than the 1.8 per cent growth in the previous quarter.

In the core central region (CCR), the price increase eased to 0.5 per cent for non-landed private housing in the first quarter, from a 3.2 per cent rise previously.

Resale volumes of private residential properties ticked up by 6.4 per cent in the latest quarter to 4,519 transactions, compared with 4,249 units in the previous three months.

Huttons’ Mr Lee said: “The resale market, which included the landed segment, probably drove much of the 3.3 per cent price gain." Resales accounted for more than half of the private housing transactions during the quarter, as buyers who were unable to secure their choice units in new launches turned to the secondary market, he added.

Ms Sun from OrangeTee noted that foreign buyers seemed to be coming back to Singapore's property market. In the first quarter, 281 non-landed private homes were bought by non-permanent residents, higher than the 199 units in Q4 2020.

According to ERA's Mr Mak, the concern about rising home prices and the risk of additional cooling measures motivated some buyers to rush to acquire residential properties.

Rents of private homes picked up pace, gaining 2.2 per cent quarter on quarter, compared with the 0.1 per cent increase earlier, URA data showed.

“Fewer homes were available for lease in recent months, and the reduced stock helped prop up rents,” said Ms Sun.

Rental demand may have gone up as well, as more Singaporeans, permanent residents, foreign students and long-term pass holders returned to the city-state from abroad, she added. Many of them were looking for accommodation near their schools and workplaces, which supported demand for private homes and HDB resale flats in the city fringe and suburban areas, Ms Sun said.

The increase in private housing rents was driven by non-landed properties, where rents grew 2.4 per cent, versus the 0.1 per cent fall in the fourth quarter of last year.

Landed homes’ rents edged up by 0.6 per cent in the first quarter, compared with the 0.7 per cent increase previously.

Developers sold 3,493 private residential units - excluding executive condominiums (ECs), a private-public housing hybrid - in Q1 2021. That is about a third more than the 2,603 moved in the final quarter last year.

In terms of launches, developers put 3,716 uncompleted private homes, excluding ECs, up for sale this January-March. That is nearly a fifth more than the 3,147 units launched in October-December last year.

JLL senior director, research and consultancy, Ong Teck Hui, said the latest new sales and launch volumes were the highest first-quarter figures in seven years. This “reflects a buoyant market that sets an optimistic tone for the coming quarters”, and the price uptrend has led “many” buyers to make their purchases before prices escalate further, he added.

Supply in the pipeline - that is, new development or redevelopment projects with planning approvals - continued to shrink. As at the end of March 2021, it totalled 48,139 uncompleted private residential units, excluding ECs, down 2.4 per cent from the supply of 49,307 units by the end of 2020.

Overall private residential properties’ prices could increase by up to 5 per cent this year, Mr Lee predicted. “Some of the price growth may come from the cost pressure in the construction industry which is facing a manpower crunch because of Covid-19. The latest ban on foreign workers from India will further add to the costs in 2021 and 2022,” Mr Lee added.

ERA's Mr Mak foresees the private residential property price index increasing by 7-10 per cent this year.

The supply of new mass-market homes will remain limited this year, while more luxury and city-fringe projects are slated to be launched, Ms Sun said. “The increased sales of such homes with higher price tags may uplift the overall residential price index in the next few quarters.”

Buyers looking for affordable private homes may continue to turn to the resale market in suburban or selected city-fringe areas, which could drive resale volumes this year to surpass the numbers in 2019 and 2020, Ms Sun added.

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