Private home prices rise 2.2% last year despite COVID-19 pandemic

SINGAPORE: Private home prices in Singapore increased by 2.2 per cent last year despite the COVID-19 pandemic, driven mainly by non-landed properties and attractive offers dangled by developers, said analysts.

According to statistics released by the Urban Redevelopment Authority (URA) on Friday (Jan 22), prices of private residential properties in the fourth quarter rose 2.1 per cent from the previous three months. This is an increase from the 0.8 per cent rise seen in the third quarter.

The private residential property price index increased to 157 points in the fourth quarter, up from 153.8 points in the third quarter. This is unchanged from the flash estimates released earlier this month.

Private home prices had risen 2.7 per cent in 2019, before the COVID-19 outbreak in Singapore.

"Property markets around the world saw an unlikely boom during the worst economic fallout and health crisis in living memory," said Ms Christine Sun, senior vice president of research and analytics at OrangeTee.

"Property prices have been rising and the uptrend is widespread across many countries including the US, Canada, Europe, China, Australia, and Asia. In some advanced cities, prices have even exceeded pre-crisis levels," she added.

Prices of non-landed properties rose 3 per cent in the final quarter of the year, said URA, taking the total increase for 2020 to 2.5 per cent.

This was driven by sales in the Core Central Region, where prices of non-landed properties rose by 3.2 per cent in the fourth quarter, compared with a decrease of 3.8 per cent in the previous quarter.

In the Rest of Central Region, prices of non-landed properties rose 4.4 per cent, extending the 2.5 per cent increase in the last quarter.

Prices in the Outside Central Region rose by 1.8 per cent, adding to the 1.7 per cent increase in the previous quarter.

In the landed segment, prices fell 1.6 per cent in the fourth quarter. For the whole year, prices of landed properties were up 1.2 per cent.

"While the pandemic has triggered long-lasting scars and unprecedented challenges for the global economy, certain factors have also made it more favourable for buyers who have been struggling to enter the market for several years," said Ms Sun.

"Attractive offers were dangled by developers while sellers eager to offload units were more open to price negotiations. Record-low interest rates have also lowered the hurdle of property ownership and encouraged undecided buyers to ‘get off the fence’," she added. 

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RENTALS

Rentals, however, did not see the same resilience as private home prices. For the whole of 2020, rentals of of private residential properties fell 0.6 per cent, compared with the 1.4 per cent increase in 2019.

It closed out the last quarter of the year with a 0.1 per cent increase after two consecutive quarters of decreases - a 1.2 per cent decline in the second quarter and a 0.5 per cent drop in the third quarter.

LAUNCHES AND TAKE-UP 

In 2020, developers sold 9,982 private homes (excluding executive condominiums), compared with the 9,912 sold the year before.

Additionally, 958 executive condominiums were sold last year, compared with 505 units in 2019.

Between October and December, developers launched 3,147 uncompleted residential units (excluding executive condominiums), compared with 3,791 units in the third quarter. They sold 2,603 units during this period, down 26 per cent from the third quarter.

No executive condominiums were launched in the fourth quarter, while 133 such units were purchased.

PropNex CEO Ismail Gafoor noted that home buying demand was firmly driven by local buyers last year,  with Singaporeans accounting for about 82 per cent of overall private residential transactions.

"This is the highest proportion of private home purchases by Singaporeans since 2001 where they made up nearly 84 per cent of the total sales, based on URA Realis data. We believe many local buyers take a mid- to long-term view of their property purchase and are motivated to enter the market last year to capitalise on the lower borrowing rates and attractive properties," he said.

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RESALES

The fourth quarter of 2020 saw 4,249 resale transactions, compared with the 3,467 units transacted in the preceding quarter. Such transactions accounted for 61.3 per cent of all sale transactions in the quarter, compared with a 49.2 per cent share in the third quarter.

There were a total of 10,729 resale transactions last year, compared with the 8,949 resale transactions in 2019.

Going forward, analysts said they expect the property market to see continued interest.

"Many of the sales drivers – such as low interest rates, effective management of COVID-19, and economic recovery hopes - that fuelled the property market in 2020 will continue to spur buying interest this year," said Mr Ismail.