SINGAPORE: Private home prices in Singapore rose 3.3 per cent in the first quarter of the year, topping flash estimates released earlier in the month, on the back of strong demand and costlier transactions, analysts said.
The private residential property price index increased to 162.2 points in the first quarter of 2021, up from 157 points in the last quarter of 2020, according to real estate statistics released by the Urban Redevelopment Authority (URA) on Friday (Apr 23).
The figure marks the fourth straight quarter of price increases, and extends the 2.1 per cent rise in the quarter before.
It is also the sharpest quarterly increase since the second quarter of 2018, when prices rose by 3.4 per cent, triggering a round of cooling measures after.
The overall increase can be attributed to strong local demand for private homeownership and the resurgence of foreign investment, said Ms Christine Sun, Senior Vice-President of Research & Analytics at OrangeTee & Tie.
Mr Lee Sze Teck, who heads research at Huttons Asia, added that strong demand was evidenced by the total number of transactions, which stood at 8,100 - the highest since the fourth quarter of 2012.
LANDED PROPERTY BOOST
In particular, the higher home prices were boosted by the landed property segment - prices for such homes rose 6.7 per cent in the first quarter, reversing a 1.6 per cent decline in the previous quarter.
This rise could be due to a growing demand for larger home spaces amid the pandemic, said Mr Nicholas Mak, Head of Research & Consultancy at ERA Realty.
The "rising prices of condominiums had also made landed housing appear to be value for money", leading to greater demand for the latter, he added.
In the non-landed property segment, prices rose 2.5 per cent, down slightly from a 3 per cent rise in the quarter before, said URA.
Specifically, in the Core Central Region, prices rose 0.5 per cent, slowing from a 3.2 per cent increase in the quarter before.
In the Rest of Central Region, prices rose 6.1 per cent, extending the previous quarter's increase of 4.4 per cent.
Prices in the Outside Central Region rose by 1.1 per cent, slowing from a 1.8 per cent increase the previous quarter.
Ms Sun noted that foreign buyers have returned to the market in both landed and non-landed segments.
Compared to the previous quarters, the number of homes bought by foreign buyers has increased by about 28 per cent and 41 per cent respectively, she said.
Rental saw stronger growth in the first quarter of the year, rising by 2.2 per cent, beating the previous quarter’s increase of 0.1 per cent.
It marks a stronger turnaround following decreases seen in the second and third quarters of last year.
Ms Sun noted this was because fewer homes have been available for lease in recent months, with more Singaporeans returning to the country and foreign tenants staying put amid travel restrictions.
This reduced stock has propped up rents, she said.
LAUNCHES AND TAKE-UP
Developers launched 3,716 private homes (excluding executive condominiums) for sale in the first quarter, compared with 3,147 units in the previous quarter.
They sold 3,493 such units in the period, up 34.2 per cent from the 2,603 units sold in the last quarter of 2020.
In addition, they launched 700 executive condominium units, and sold 647 such units. This is a spike from the 133 units sold in the previous quarter, where no EC units were launched.
In the resale market, 4,519 units changed hands in the first three months of the year, compared with 4,249 units in the preceding quarter.
Such transactions accounted for 55.8 per cent of all sales in the first quarter, down from a 61.3 per cent share in the previous quarter.
SUPPLY IN THE PIPELINE
As of the end of the first quarter, there were 21,602 unsold and uncompleted private residential homes in the pipeline – compared with 24,296 units in the quarter before.
Including executive condominiums, the number goes up to 23,735 units, lower than the 26,426 in the previous quarter.
Analysts had earlier flagged that the dwindling supply of units could be pushing up prices.
Based on the expected completion dates reported by developers, 4,942 units (including executive condominiums) are slated to be completed in the remaining three quarters of the year.
URA added that there is also a potential supply of around 3,840 units (including executive condominiums) from Government Land Sales (GLS) sites that have not received planning approval yet.
“The supply of private housing in the pipeline, including from GLS sites, will sufficiently cater to the housing needs of the population when completed over the next few years," URA said.
But Huttons’ Mr Lee expressed doubts over the sufficiency of current supply.
“Assuming all the en bloc sites and sites on the Confirmed and Reserve List of the first half of the 2021 GLS programme are sold, this will probably add up to around 7,000 units.
"It will not be enough to meet the average annual demand of 9,400 units in the last five years,” he said.
URA added that the Government will continue to monitor economic and property market conditions closely and adjust the supply of future GLS Programmes if needed, to ensure it remains adequate in meeting demand.
Analysts expect private home prices to rise further, with low mortgage rates and a recovering economy.
In addition, more luxury and city-fringe projects are set to be launched in the coming months, while mass-market projects remain limited, Ms Sun said.
“The increased sales of such homes with higher price tags may uplift the overall residential price index in the next few quarters,” she explained.
Mr Lee added that future price growth may come from cost pressures in the construction industry, which is having a hard time bringing in workers because of the pandemic.
With fresh border restrictions for travellers from India, Mr Lee said labour costs could go up even further in 2021 and 2022.