Singapore private home prices up by 3.3% in Q1, rising at faster pace

SINGAPORE: Prices of private homes increased by 3.3 per cent in the first quarter of 2023, accelerating from a 0.4 per cent increase in the previous quarter, according to the Urban Redevelopment Authority's statistics released on Friday (Apr 28).

The increase was higher for landed properties at 5.9 per cent, compared with 0.6 per cent last quarter. Prices of non-landed properties increased by 2.6 per cent, also higher than the previous quarter (0.3 per cent).

For condominiums, the increase was driven by strong sales in the Rest of Central Region (RCR), which increased by 4.4 per cent.

Suburban or Outside Central Region (OCR) condo prices increased by 1.9 per cent, reversing a 2.6 per cent decline in the previous quarter. Prices in the Core Central Region (CCR) edged up by 0.8 per cent.

Rentals increased by 7.2 per cent in the quarter, a slight drop from the 7.4 per cent increase in the previous quarter.

The rise in price growth can be explained by a combination of factors - a progressive pickup in demand in the new launch market, the return of foreign buyers and an increase in high-value transactions surpassing the S$10 million threshold, said Mr Mohan Sandrasegeran, senior analyst at One Global Group.

There were 57 private units sold at S$10 million or more, compared with 45 units sold in the fourth quarter of 2022, an increase of 26.7 per cent, he said.

Excluding executive condominiums (EC), developers launched 1,312 uncompleted condos for sale in the first quarter, more than double the 504 units in the previous quarter. Sales also went up, with 1,256 units sold, up from 690 units before.

No EC units were launched, but developers sold 206 units in the quarter from earlier launches. In the previous quarter, 1,257 EC units were launched for sale and 1,127 sold.

There were 2,622 resale transactions. Resale transactions accounted for 63.6 per cent of all sales in the first quarter. There were 243 sub-sales, in which the buyer sells on the property to another buyer before the condo's completion.

Ms Christine Sun, senior vice president of research & analytics at OrangeTee & Tie, said that the higher proportion of new sales compared with the last quarter could have driven price increases in the first quarter of 2023, as new homes are usually sold at higher prices than resales.

New sales, excluding ECs, constituted 30.5 per cent of total sales in the quarter, up from 19.2 per cent in the fourth quarter of 2022.

The sales increase was driven by the launch of a few mid-sized projects, such as The Botany at Dairy Farm, Sceneca Residence and Terra Hill.

SUPPLY INCREASING

A total of 3,785 private residential units were completed in the first quarter of 2023, fewer than the 4,423 units completed in the preceding quarter.

But this was around 60 per cent more than the average of around 2,400 units completed per quarter in 2022. Projects completed in the quarter include Avenue South Residence, Piermont Grand, Kent Ridge Hill Residences and Riviere. 

With the large supply completion, the vacancy rate for private homes rose to a five-quarter high of 6 per cent, from 5.5 per cent in the previous quarter. 

For the whole of 2023, a total of around 19,000 units are expected to be completed, the highest annual supply completion since 2017, said URA.

Based on the expected completion dates reported by developers, 15,221 units (including ECs) will be completed in the remaining three quarters of 2023. Another 21,421 units are expected to be completed in 2024 and 2025.

The government has further ramped up the supply of private housing on the Confirmed List for the GLS Programme to 4,090 units in the 1st half of 2023 from 3,505 units in the 2nd half of 2022, to cater to demand.

"The ramp up in housing supply complements the increases in Additional Buyer’s Stamp Duty (ABSD) rates (on Thursday) which were implemented to preemptively manage local and foreign investment housing demand and prioritise housing for locals buying for owner-occupation," URA said.

RENTALS

The increase in the rentals of non-landed properties moderated to 6.2 per cent, from the 7.5 per cent increase in the previous quarter.

However, rentals for landed properties jumped by 14.5 per cent, much higher than the 6.3 per cent increase in the previous quarter.

Rentals of non-landed properties in CCR saw an increase of 6.4 per cent. The increase in the RCR was 6.2 per cent; and in the OCR, it was 6.1 per cent, all lower than the previous quarter.

Huttons' senior director of research Lee Sze Teck said that gains in private property rents were largely driven by the landed segment and the CCR. A detached house in the Good Class Bungalow area was rented for S$170,000 per month while a four-bedroom unit at The Marq on Paterson Hill was leased for a monthly rent of S$100,000.

"These deals are probably by UHNWIs (ultra-high net worth individuals) who are awaiting the approval of their permanent residency application before buying their first home in Singapore," said Mr Lee.

OUTLOOK

Ms Sun said that the cooling measures on Apr 27 will probably dampen demand over the next few months, allowing more homes to be completed and housing supply to catch up.

She said new home sales may continue to recover as a number of high-profile projects were launched in the second quarter, and more are slated for launch in the coming months. Some developers may not hold back their launches as first-timers are not hit by the ABSD increase.

"When there is better market equilibrium, prices are likely to stabilise. Price gains may also slow down when demand contracts. This will benefit first-timers and HDB upgraders buying their first private homes," she said.

Mr Sandrasegeran said that some potential buyers and investors may adopt a wait-and-see approach before making any purchase decisions, but first-time home buyers are motivated by their immediate housing needs and are not affected by the cooling measures.

"The demand for affordable private properties such as condominium units, which are priced within their budget and offer attractive amenities in convenient locations, will still exist, albeit at a slower pace."