Singapore private home prices may jump 6-7% this year, analysts say

Updated from : The Business Times, 22 Oct 2021

THE private housing market in Singapore may well end this year on a high note, as the economy continues to recover while the luxury and rental segments could enjoy a boost from foreign demand, analysts said.

This comes as overall prices of private residential properties islandwide clocked their sixth consecutive quarterly growth, undeterred by tightened pandemic-related measures during the July-September period. The latest figures for Q3 2021 are also 6.9 per cent above the previous peak in Q3 2013.

Property analysts are anticipating a full-year price gain of between 6 per cent and 7 per cent for 2021. If achieved, that will surpass the increases of 2.2 per cent in 2020 and 2.7 per cent in 2019.

Huttons Asia chief executive officer (CEO) Mark Yip said: “The strong global economic recovery, opening up of borders, high vaccination rate and stable political environment in Singapore are supportive of a growth environment.”

He added that the country’s luxury housing market may benefit when more Vaccinated Travel Lanes (VTLs) are set up and foreigners are able to travel to Singapore.

PropNex Realty anticipates “slightly muted” home sales for the fourth quarter this year, as viewings may be affected by restrictions under the Stabilisation Phase as well as year-end festivities. Nonetheless, new-sale volumes, excluding executive condominiums (ECs), for the whole of 2021 could jump 30 per cent to approach 13,000 units, compared with last year’s 9,982 units, said PropNex CEO Ismail Gafoor.

OrangeTee & Tie senior vice-president of research and analytics, Christine Sun, expects new private home sales to touch an 8-year high for 2021 with some 12,000 to 12,500 transactions, excluding ECs. The previous high was in 2013, when 14,948 units were sold.

And in the resale market, the full-year transaction volumes may almost double to around 19,500 to 20,500 units, from 10,729 units last year, Sun said.

Meanwhile, Edmund Tie foresees homebuyers “gravitating towards the less-central locations”, as work-from-home practices become more entrenched. “While location and price remain the key drivers of demand, buyers will increasingly factor in other project features such as flexible unit design and layout efficiency, communal areas and facilities, and smart-living features,” the firm’s head of research and consulting Lam Chern Woon said.

On Friday (Oct 22), final figures released by the Urban Redevelopment Authority (URA) showed that prices of private residential properties across Singapore increased quarter on quarter by 1.1 per cent in Q3 2021, slightly steeper than the 0.8 per cent rise in Q2 2021.

This is also a tad stronger than the flash estimates put out on Oct 1, which had reflected a 0.9 per cent gain for the July-September period.

Partly fuelling the strength in overall prices in the third quarter was a 2.6 per cent jump for landed properties, which more than reversed the segment’s 0.3 per cent drop in Q2 2021.

Wealth from booming industries, such as the new-economy sectors, drove demand for landed properties, said Edmund Tie’s Lam. “We have also observed sharp price growth in landed homes due to capital improvements or redevelopment carried out prior to sale,” he added.

Yip from Huttons noted that about 23 transactions in Good Class Bungalow (GCB) Areas took place during the three months, taking the year-to-date tally to 79. “Several large-quantum deals along Cluny Road, Queen Astrid Park and Bishopsgate were sealed in the quarter,” he said.

Non-landed private homes became 0.7 per cent pricier in Q3 2021, slowing from the 1.1 per cent rise in the previous quarter, according to the URA statistics.

By region, only the rest of central region (RCR), or city fringe, saw an increase in prices for non-landed properties. They climbed 2.6 per cent, speeding up from the 0.1 per cent growth in the second quarter.

Both the core central region (CCR) and the outside central region (OCR) recorded lower prices for non-landed homes in the third quarter, versus the second quarter’s gains. In the CCR, there was a 0.5 per cent decrease, compared with the 1.1 per cent increase in the three months prior. The OCR, or suburbs, saw non-landed property prices edging down 0.1 per cent, compared with a 1.9 per cent rise previously.

In the rental market, overall private residential properties islandwide posted a 1.8 per cent growth in rents for the third quarter, easing from a 2.9 per cent jump in the previous quarter.

“Rents are rising amid a tight supply of completed homes,” Sun said. With the reopening of borders, she expects rental demand to improve when more Singaporeans, permanent residents and foreign expatriates return to the city-state, and when companies ramp up their hiring of foreigners.

As for resale transactions, 5,362 units changed hands in the July-September period this year, slightly more than the 5,333 units in the April-June quarter.

That is the highest quarterly resale volume since Q3 2009, when 5,809 resale units were transacted, Sun said.

She added that a growing number of Housing Board (HDB) upgraders are turning to the OCR or suburban resale market, given the affordability there and the dwindling new home supply.

Developers sold 3,550 private residential units – excluding ECs – in Q3 this year. That is nearly a fifth more than the 2,966 units moved in the previous quarter.

It also marks the strongest quarterly sales volume since Q2 2013, even as developers launched fewer projects and units in the latest three months, according to Huttons.

In terms of launches, property developers put 2,149 uncompleted private residential units, excluding ECs, on the market this July-September, fewer than the 2,356 units launched in the April-June period.

Although there was a smaller number of CCR launches in Q3 2021, sales of these upmarket homes remained healthy. “The luxury segment was abuzz with activity, as Singapore is widely regarded as a safe haven in times of uncertainty,” Yip noted. For instance, ultra-high-net-worth individuals scooped up large floor-plate units in projects such as Les Maisons Nassim, Le Nouvel Ardmore and Eden Residences Capitol.

As at the end of September, there was a total supply of 47,715 uncompleted private residential units, excluding ECs, in the pipeline with planning approvals. That is up from the 47,097 units in the previous quarter.

Of this supply in the pipeline, 17,140 units remained unsold, about 11.6 per cent fewer than the 19,384 unsold units as at the end of June.