Updated from : The Business Times, 21 Sep 2022
THE median price per square foot (psf) gap between new, non-landed homes in the Core Central Region (CCR) and those in the Rest of Central Region (RCR) narrowed to 14.9 per cent in August, after having done so to 25.07 per cent in April, Huttons Asia has said in a new report.
Typically, CCR homes cost more than those in the RCR and Outside Central Region (OCR). The median price psf gap between CCR and RCR new non-landed homes was at around 42.7 per cent in the past 10 years, said Huttons’ senior director of research, Lee Sze Teck.
With the increase in the RCR’s psf price since June, the median price paid for a new non-landed home there has exceeded that in the CCR. As of August, buyers paid S$2.47 million for a new non-landed home in the RCR, 10.8 per cent more than in the CCR.
This narrowing price gap has also been observed by Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie.
In a report released in May, she noted that a new benchmark price may be forming in the RCR, where more condos are being sold at prices similar to those of luxury condos. For instance, 5 years ago, 93.3 per cent of new condos in the RCR were transacted at between S$1,000 and S$2,000 psf. Price bands have since moved up; 80.9 per cent of new condos there sold for between S$1,500 and S$2,500 psf last year. Transactions of above S$2,500 psf ballooned to 19.1 per cent in 2021, a leap from 0.4 per cent in 2017.
Sun said the median price of new condominiums, excluding executive condominiums, has been rising over the past few months; the median price has gone from S$1,928 psf in January to S$2,644 psf in August – a rise of 37.1 per cent.
“The price increase was mainly driven by the condominiums in RCR, where the median price surged by 24.1 per cent over the past 8 months – from S$1,964 psf in January to S$2,437 psf,” she noted.
Sun suggested that some RCR prices are approaching the S$3,000 psf level, which is the price level for luxury homes located near the Downtown Core. These include projects such as Canninghill Piers, Rivière and Sky Everton.
Other reasons for rising RCR prices could come from their attributes, such as the condo being part of an integrated development, or that it offers good views or that it is built by top developers known for high-quality finishes, she said.
Huttons’ Lee said the narrowing price gap means a window has opened in the CCR for buyers to purchase a similar-sized home with the same budget as that for an RCR home.
This realisation by purchasers has led to developers selling an estimated 199 CCR homes per month between April and August – 66.7 per cent more than the monthly average in the first quarter of 2022.
Developer sales in the CCR made up half of the total sales in August, the first time since October 2017 that this has happened.
Lee said that if the price gap between CCR and RCR homes returns to the past decade’s average of about 40 per cent, then the median price for CCR homes could potentially increase to S$3,400 psf from the current level of S$2,801 psf – an upside of over 20 per cent.
But while Sun said that healthy sales in the CCR are an indication that people are seeing the value of luxury homes relative to RCR ones, she added that, beyond the psf price, the quantum for CCR homes could still put them out of reach as the unsold units could be the larger ones.