Singapore Q2 private home prices up 0.8%, easing from 3.3% growth in prior quarter

Nisha Ramchandani

Published Fri, Jul 23, 2021 · 09:43 AM

THE return of tightened restrictions in July and August could hit sales of new private homes and result in a modest increase in overall private home prices in the third quarter, analysts say.

Nonetheless, analysts still expect the number of homes sold by developers in the primary market to surpass 10,000 units this year, with some suggesting sales volumes could climb as high as 12,000 units. Last year, developers moved 9,982 units.

Meanwhile, the increase in overall home prices for 2021 could range from 5 per cent to 9 per cent, based on the various analyst projections.

JLL’s senior director (research & consultancy) Ong Teck Hui expects moderate sales for new home sales for the rest of July and August. However, “if the pandemic is well contained, sales for the rest of August and September should improve as transaction activity picks up”, he said.

“With the Phase 2 (Heightened Alert) measures affecting sales volume for part of Q3 2021, the price increase in this quarter is expected to be modest,” he added. “Both buyers and sellers are likely to be more cautious due to the uncertainty caused by the spread of infection.”

Some project launches scheduled for this month, such as The Watergardens At Canberra and Parc Greenwich executive condominium (EC), have been deferred, PropNex chief executive Ismail Gafoor noted, although he said he did not expect home demand nor prices to be significantly hit.

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ERA’s head of research and consultancy, Nicholas Mak, said: “The impact of the tighter social-distancing measures on the real estate market will be repeated in the third quarter. Private residential property prices are expected to continue to expand, but at a modest pace, which will lead to a 5 per cent to 8 per cent year-on-year growth for the whole year.” The silver lining to slower price growth, he added, is that the risk of additional cooling measures is deflated.

Data released by the Urban Redevelopment Authority on Friday showed that private home prices in Singapore rose 0.8 per cent in the second quarter of this year, slowing from 3.3 per cent in the previous quarter. Analysts say that the curbs implemented from May 16 to June 13 - which prompted developers to shelve launches - contributed to the slower pace of growth.

In addition, “rising home values have triggered a slight market slowdown in certain locations,” said Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie; she noted that the overall URA price index has increased for five consecutive quarters.

Private home prices rose 4.1 per cent in the first half of this year, and 7.1 per cent year-on-year in Q2 2021.

With the risk of property cooling measures reduced, a bigger concern for home-buyer demand would be “increasingly prohibitive restrictions” if there is a sudden spike in the number of Covid-19 cases, although such measures are likely to be less severe once Singapore reaches herd immunity, said Knight Frank’s head of research, Leonard Tay.

During the second quarter, prices of landed properties pulled back by 0.3 per cent, reversing from a 6.7 per cent increase in the prior quarter. “After a strong run-up in prices in Q1 2021, some landed homeowners raised their asking prices, putting themselves out of reach for some buyers, resulting in a pull-back in prices in Q2 2021,” said Huttons Asia’s senior director of research, Lee Sze Teck.

Meanwhile, prices of non-landed homes rose 1.1 per cent, down from a 2.5 per cent increase previously. In the Core Central Region (CCR), prices were up 1.1 per cent, versus a 0.5 per cent increase in Q1, while prices of non-landed homes in the Rest of Central Region (RCR) edged up 0.1 per cent, easing from a 6.1 per cent increase previously. Prices of non-landed properties in Outside the Central Region (OCR) rose 1.9 per cent, faster than the 1.1 per cent increase in the previous quarter, likely supported by HDB upgraders.

URA’s data also showed that rents of private homes climbed 2.9 per cent in the second quarter, accelerating from a 2.2 per cent increase in the previous quarter, as rents of both landed and non-landed homes rose. Still, the vacancy rate dipped 0.1 percentage point to 6.3 per cent.

Mr Mak noted that the pandemic has given the rental market a boost as construction activities have been disrupted, prompting some households to rent while waiting for their properties to be completed.

Analysts say rents, which are also partly bolstered in the near-term by foreigners “in limbo” due to travel restrictions, could continue to rise this year, given a low incoming completed supply.

With the restrictions in place, developers launched 2,356 uncompleted private homes (excluding executive condominiums or ECs) for sale in Q2, nearly 37 per cent lower than the 3,716 units launched in Q1.

In the quarter under review, they sold 2,966 private homes, down from the 3,493 units sold in the previous quarter. Some 413 EC units were launched for sale in Q2, and developers sold 495 EC units during the quarter.

Resale transactions picked up steam as new launches were postponed and construction of new projects were hampered by the pandemic. There were 5,333 resale transactions in Q2, accounting for about 63 per cent of all sale transactions. In comparison, 4,519 resale units were transacted in the previous quarter.

Cushman & Wakefield’s head of research (Singapore), Wong Xian Yang said: “Given the significant delay in construction progress of housing projects across Singapore as well as developers holding back new launches, many buyers had to turn to the resale market for more options.

“Q2 resale volumes are the highest since Q3 2009’s 5,809 units.”

Meanwhile, the number of unsold units continues to tick lower. As at the end of the second quarter, there was a total supply of 47,097 uncompleted private homes (excluding ECs) in the pipeline with planning approvals, compared with 48,139 units in the previous quarter. Of this, 19,384 units remained unsold as at the end of the second quarter. The supply of EC units in the pipeline stood at 4,113, of which 1,671 EC units remained unsold.

Tricia Song, CBRE’s head of research (South-east Asia), said: “It is likely that upcoming tenders of Government Land Sales sites will continue to see strong interest, while sites from the private market will also be attractive to developers looking for redevelopment sites.”

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