Private home prices up 3.8% in 3Q2022, driven by OCR properties
/ EdgeProp Singapore |
Lentor Modern was the best-selling project in 3Q2022 with 512 units sold at a median price of $2,108 psf (Picture: Samuel Isaac Chua/The Edge Singapore)
SINGAPORE (EDGERPOP) - Private home prices in Singapore increased by 3.8% q-o-q in 3Q2022, according to URA data released on Oct 28. This is higher than the flash estimate of 3.4% released by URA on Oct 3. It also marks an acceleration from the 3.5% q-o-q growth recorded in the previous quarter.
This brings the overall private home price increase to 8.2% for the first three quarters of the year, higher than the 5.3% growth registered for the first nine months of 2021. “The price growth in 3Q2022 is the fastest since 4Q2021 and is largely driven by [non-landed properties in] the Outside Central Region (OCR) where prices accelerated to 7.5% from 2.1% in 2Q2022,” says Lee Sze Teck, senior director of research at Huttons Asia. This is the fastest pace of increase in OCR prices since 3Q2009.
Lee attributes the steep price growth in the OCR to three major regional launches during the quarter — the 372-unit Amo Residence, which launched on July 23, the 158-unit Sky Eden@Bedok, which launched on Sept 7 and the 605-unit Lentor Modern which was launched on Sept 17.
Leonard Tay, head of research at Knight Frank Singapore, says: “Demand for these new launches in suburban locations was strong, as homebuyers were willing to pay prices set at new benchmarks for suburban condominiums, exhibiting the upward housing aspirations of Singaporeans who have the financial means as a result of steadily growing affluence and household-net-worth prosperity in the past decade.”
Elsewhere, prices of non-landed properties in the Core Central Region (CCR) increased by 2.3% in 3Q2022, higher than the 1.9% increase in the previous quarter. In the Rest of Central Region (RCR), prices increased by 2.8%, slowing down from the 6.4% increase in the previous quarter.
The price acceleration in the OCR has further reduced the gap between the OCR with the CCR and the RCR, says Ismail Gafoor, CEO of PropNex Realty. “The uplift in OCR home values in 3Q2022 had narrowed the non-landed new sale average unit price gap between the sub-market and the CCR and RCR to 38% and 19%, respectively — down from 55% and 28% in 2Q2022.”.
Gafoor adds that buyers may be taking advantage of the narrowing price gaps to consider properties in the CCR and RCR. “Apart from three OCR launches which topped sales in 3Q2022, the other popular projects that followed were in the CCR and RCR, such as Hyll on Holland, Riviere, Leedon Green, and Perfect Ten,” he observes.
Meanwhile, landed properties saw price growth moderate to 1.6% q-o-q in 3Q2022, slower than the 2.9% q-o-q increase observed in the previous quarter.
In terms of volume, new home sales excluding executive condominium (EC) units totalled 2,187 units, declining 8.8% from 2,397 transactions recorded in the previous quarter. This comes on the back of a lower number of launched units, with 1,455 homes launched for sale this quarter, 26% lower than the 1,956 units launched in 2Q2022.
Despite the lower number of new home sales, Lam Chern Woon, head of research and consulting at Edmund Tie, observes that the take-up rate for new units rose to 150% in 3Q2022, compared to 123% in the previous quarter, signifying the “unfettered property demand”. Year to date, developer sales excluding ECs come up to 6,409 units.
Amo Residence was the second best-selling project in 3Q2022, with 362 units sold at a median price of $2,110 psf (Picture: Samuel Isaac Chua/The Edge Singapore)
Meanwhile, the secondary market sales volumes, which include resale and sub-sale transactions, decreased by 10.3% q-o-q in 3Q2022, totalling 3,961 transactions. “The slowdown in secondary sales activity does point to more caution among homebuyers in an increasingly somber economic climate,” says Lam.
Separately, rental prices surged by 8.6% q-o-q in 3Q2022, surpassing the 6.7% increase logged in the preceding quarter. This is the largest quarterly rate of growth since 2Q2007 when the rental index jumped 11.4% q-o-q, points out Nicholas Mak, head of research and consultancy at ERA Realty Network.
He attributes the accelerated growth to the arrival of more foreigners to work and study in Singapore after the government eased travel and Covid restrictions, as well as tight supply. For the first nine months of the year, private residential rents have surged 20.8%.
Looking ahead, Wong Xian Yang, head of research, Singapore at Cushman & Wakefield, believes a further slowdown in market sales is expected as buyers become more cautious and prudent due to the new cooling measures and the cloudy economic outlook.
Huttons’ Lee has a similar view, noting that in the wake of cooling measures and year-end holidays, developers may defer some private home launches to next year. He also notes that the number of launched and unsold stock in the market stands at 2,133 units as of 3Q2022, the lowest level since 4Q2018.
Lee anticipates transaction volume in 4Q2022 to ease to between 1,000 and 1,500 units. This would bring the total volume for the year to around 8,000 transactions. Similarly, he anticipates price growth to moderate to between 1% to 2% in 4Q2022, resulting in full-year growth between 9% to 10%.
Meanwhile, growth in rental rates are expected to remain sustained given the low number of new completions. “The rental market may only start to ease in 2023 when economic conditions are expected to weaken, and a higher number of units are slated for completion,” says JLL’s senior director of research and consultancy, Singapore, Ong Teck Hui.
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