SINGAPORE (EDGEPROP) - The URA flash estimate released on July 1 showed that the private residential property index increased 0.9% in 2Q2021, compared to 3.3% in 1Q2021. It marks the fifth consecutive quarterly price growth, but at the slowest pace of growth in the past three quarters, notes Christine Sun, OrangeTee & Tie senior vice president of research & analytics. In comparison, the price increase of 3.3% in 1Q2021 was the steepest quarterly price increase since 2Q2018, notes Sun. (See also: Prices at non-central regions grow by 1.8% y-o-y: SRPI)
For the first six months of 2021 to-date, overall private residential prices increased by 4.3%, says Leonard Tay, head of research at Knight Frank Singapore. Over the past 12 months, prices increased 7.3%, according to the URA price index.
The price increase in 2Q2021 was mainly driven by non-landed homes in the Outside of Central Region (OCR) which rose by 1.8% q-o-q. “Prices rose the fastest for the OCR where supply was leanest,” says Sun. In contrast, the price increase was less significant for the Rest of Central Region (RCR) at 0.3% and 0.6% in the Core Central Region (CCR).
The Phase 2 (Heightened Alert) measures from May 16 to June 13 contributed to the dampening effect on prices as transactions slowed, with buyer and sellers turning cautious, says Ong Teck Hui, senior director of research & consultancy at JLL. “Total private residential transactions slowed 21% from April to May while June’s transaction volume was about half that of May,” he adds.
There were fewer launches in the three months from April to June due to Singapore’s heightened alert period, and tighter restrictions at project sales galleries, notes OrangeTee & Tie’s Sun. Not only were there fewer new homes sold, but these typically carried higher price tags compared to properties in the secondary market, she observes.
The price moderation was quite even across market segments with the CCR, RCR and landed sub-markets registering price increases of below 1%. Price increase for OCR was at a higher 1.8% in comparison. “This could be due to OCR homes being the most affordable, and having the widest demand base,” notes Sun. The strong demand for completed homes in the OCR was met with scant supply as a result of construction delays and labour crunch, she adds.
“As resale homes formed a higher proportion of transactions last quarter, the overall price index was pulled down by the lower prices,” explains Sun. According to caveat data from URA, 60.5% of landed and non-landed home transactions were of resale properties, higher than the 56.6% in 1Q2021.
Further, the proportion of bigger home transactions rose in 2Q2021. “Space has become a valued asset as many homeowners saw their daily lives suddenly confined to their properties,” says Sun. “Many owners were looking for homes with outdoor space and additional areas for solitude.” Last quarter, 39.6% of private homes (landed + non-landed) were at least 1,200 sq ft, higher than the 35.8% in 1Q2021. Therefore the bigger units probably resulted in lower per square foot prices for some locations, she adds.
Based on caveats lodged with URA Realis, the number of new private homes (excluding executive condominiums) sold in 2Q2021 was 2,617 units, while the number of resale properties was 1.57 times higher at 4,100 units, according to PropNex Research. “Although these sales figures trail those of 1Q2021, we think the transaction volumes in 2Q2021 are still very respectable, in view of the limited launches and tighter safe management measures,” says Ismail Gafoor, CEO of PropNex.
Average unit price of private new homes sold (excluding executive condominiums) rose 1.6% q-o-q in 2Q2021, while that of resale properties increased 1.7% over the same timeframe, according to Gafoor. “The price gap between new launches and resale properties that are in move-in condition have helped fuel demand for homes in the secondary market, thereby supporting prices,” he notes.
“Genuine homebuyer demand remains intact from HDB upgraders whose homes have recently passed the 5-year Minimum Occupation Period (MOP) and are looking to cash in at a time when HDB prices have built up considerable upward momentum since 3Q2020,” notes Knight Frank’s Tay.
The HDB Resale Index increased by 2.8% q-o-q in 2Q2021 based on today’s flash estimate, outpacing private home price movements for the three months from April to June. “The proceeds from the resale of HDB flats have enabled households to make that transition into the private residential market, especially if these are families comprising young professional couples who have benefitted from general wage increases in the past decade as reflected in the Population Census 2020,” says Tay. (See: Find HDB flats for rent or sale with our Singapore HDB directory)
The proportion of resident households earning at least $9,000 per month increased to 44.2% last year from 29.7% in 2010, according to the census data. The proportion of resident households with monthly incomes of at least $20,000 more than doubled to 13.9% in 2020 from 6.6% a decade ago.
While total average monthly household income from work rose by 35.8% to $10,608 in 2020 from a decade ago, the URA private residential price index grew 12.8% between 4Q2010 and 4Q2020, points out Knight Frank’s Tay. This suggests that the rise in affluence over the past decade has provided the impetus for growth in demand for private homes. “Notwithstanding the pandemic-led recession in 2020, the present resilience of the private home market comes at a time when the current low interest rate environment is also a contributing factor as credit remains affordable,” says Tay.
PropNex’s Gafoor doesn’t expect the final private property price index for 2Q2021 (to be released on July 23) to vary widely from the flash estimate. “The moderation in price growth as reflected by the flash estimate, and the latest comments by the Monetary Authority of Singapore’s managing director Ravi Menon that the property market is not overheated, may dispel some concerns of new cooling measures being introduced in the near-term,” he says.
Based on the flash estimates for 2Q2021, private home prices have risen by 4.3% in the first half of 2021. Gafoor is projecting an overall price growth of 6% to 7% for the full year.