SINGAPORE (EDGEPROP) - Singapore’s non-landed private home prices (excluding executive condominiums, or ECs) have recorded its first decline since the pandemic started, sliding by 0.6% q-o-q in 1Q2022. According to the 1Q2022 residential report by Knight Frank, the decline comes on the back of the property cooling measures that took effect last December.

“The private residential market was in a state of pause following the measures, compounded by the seasonal Chinese New Year lull,” the report says.

See also: OPINION: Potential impact of property cooling measures on selected projects

The total number of non-landed private homes transactions stood at 4,071 in 1Q2022, down 42.2% q-o-q. Both the primary and secondary home markets stagnated, as both buyers and sellers alike remained cautious. Non-landed primary sales dropped by 44.4% q-o-q to 1,618 transactions, clocking less than half of the sales in the previous quarter. Developers were reluctant to launch new projects so soon after the announcement of the cooling measures, resulting in only two small-scale non-landed projects being launched last quarter, totalling 48 units.

Non-landed resale transaction volume dropped considerably in 1Q2022, falling 40.7% q-o-q to 2,453 units. The lower volume was underpinned by limited resale inventory, which subdued activity in the resale market. Potential home upgraders, unable to find suitable replacement homes, delayed the listing of their homes on the market, while smaller-unit investors, incentivised by the buoyant rental market, also opted to hold their units to continue reaping rental benefits.

In the Core Central Region (CCR), non-landed home prices dropped by 0.5% q-o-q in 1Q2022, compressed by the cooling measures targeting additional buyer’s stamp duty rates for foreigners.  Total non-landed transactions in the CCR recorded the most significant drop since the pandemic, declining by 47.5% q-o-q in 1Q2022 to 701 units. Only one launch occurred in the CCR during 1Q2022 - 16 units from Ikigai.

Nonetheless, Knight Frank believes the return of international travel through the streamlined Vaccinated Travel Framework (VTF) may encourage foreign buyers to capitalise on value opportunities in the CCR.

In the Rest of Central Region (RCR), prices fell by 3% q-o-q in 1Q2022, coming off of a high base in 2021. New and resale transactions in the RCR totalled 1,502 units last quarter, dropping by 42.1% q-o-q. The launch of Royal Hallmark during 1Q2022 saw a total of 11 units sold at an average price of $1,893 psf.

Normanton Park’s balance units, sold at an average price of $1,862 psf, accounted for the bulk of primary transactions at 31.3%. While the majority of new launches maintained steady prices, new sale unit prices in the RCR dropped by 12.1% q-o-q to $2,127 psf as the bulk of transactions in 4Q2021 came from Canninghill Piers, which averaged $2,900 psf.

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In the Outside Central Region (OCR), prices inched up 1.9% q-o-q despite declines in new and resale home transactions of 47.7% and 36.8% respectively. The consistent price growth signifies strong underlying demand in suburban areas from HDB upgraders, says Knight Frank. OCR home prices are expected to continue showing growth for the rest of the year, as upcoming new projects to be launched have high land prices. (Find HDB flats for rent or sale with our Singapore HDB directory)

In the rental market, new leases totalled 13,773 in the first two months of 2022, 6.2% lower than the same period last year. The burgeoning rental demand was fed by buyers who were still in the market for replacement homes. In a landlord’s market, rising costs from inflation and property management fees drove up rents. Knight Frank expects higher mortgage payments will cause further rent increases as interest rate hikes loom ahead.

There remains great urgency in the market underpinned by strong underlying demand to find suitable homes, despite the watch-and-wait reaction to cooling measures seen in 1Q2022, observes Nicholas Keong, head, residential (international project marketing), at Knight Frank Singapore.

Around 24,000 to 28,000 homes are expected to be sold in 2022, of which 8,000 to 9,000 are new homes. Home prices are expected to moderate by rising 1% to 3% in 2022, while rent growth is projected at 7% to 9%.

“Volumes are expected to pick up sometime in Q2 2022, as developers start to launch projects especially those in choice locations and as the VTF gains momentum,” adds Keong.

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