Prices of private homes up 3.5% in Q2 as market rebounds on record launch prices, strong volume

22 Jul 2022
Property News

Prices of landed homes went up 2.9 per cent in Q2, while prices of non-landed homes climbed 3.6 per cent. 
Analysts said that the gain in the price index for private homes - which came despite headwinds such as inflation, rising interest rates and the prospect of a potential recession - was a result of new launches in the city-fringe, the return of foreign buyers as well as robust demand.

Data from the Urban Redevelopment Authority (URA) released on Friday (22 Jul) showed that prices of landed properties went up 2.9 per cent in Q2 after a 4.2 per cent increase in the prior quarter, while prices of non-landed homes climbed 3.6 per cent, reversing from a 0.3 per cent decrease previously.

The 3.5 per cent gain came on the back of two successful property launches in the city-fringe in Q2, which prompted prices of non-landed properties in the Rest of Central Region (RCR) to climb 6.4 per cent. Piccadilly Grand, which is next to Farrer Park MRT station, and LIV@MB in Mountbatten were both launched at record prices for 99-year leasehold properties in their respective areas. In contrast, prices of non-landed homes in the RCR retreated 2.7 per cent in Q1.

Meanwhile, prices of non-landed properties in the Core Central Region (CCR) rose 1.9 per cent in Q2 - versus a 0.1 per cent decrease in the previous quarter - while prices in the Outside Central Region (OCR) increased 2.1 per cent, compared with a 2.2 per cent gain in Q1.

ERA’s key executive officer Eugene Lim pointed out that the immediate pull-back after December 2021’s property curbs appears to have eased. Lim said: “The cooling measures brought some knee-jerk reactions to the market as the number of units launched and transaction volume dropped in Q1. However, in Q2, it seems like the market has recovered from the initial shock.”

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Lee Sze Teck, Huttons’ senior director (research), noted that the loosening of border curbs has helped to beef up sales of projects in the CCR and RCR. “There were 296 purchases by foreigners in Q2, an increase of more than 100 per cent over Q1’s 147 purchases, based on caveats lodged,” he said. In particular, 592 homes in the CCR were transacted in Q2, or 64 per cent more quarter on quarter.

Still, Knight Frank’s head of research, Leonard Tay, warned that price increases could start to moderate in the months ahead as higher interest rates curtail homebuyers’ purchasing power. The price index has increased 4.2 per cent in the first half of this year, despite the cooling measures.

Analysts expect some 8,000 to 9,000 units to be transacted for 2022 as a whole, while forecasts for the overall price increase this year ranges from 5 to 8 per cent.

In the rental market, rents of private homes continued to march north, with a bigger gain of 6.7 per cent in Q2 versus 4.2 per cent in Q1, marking the sharpest quarter-on-quarter increase since Q4 2007 as landlords passed on the spike in interest costs to tenants. This was led by non-landed properties, where rentals jumped 7.1 per cent, vis-à-vis a 4.1 per cent increase in the previous quarter. Rentals of landed properties climbed 3.2 per cent in Q2, slowing from the 5.3 per cent increase chalked up in Q1.

By region, rents were up across the board, although the CCR and OCR saw the biggest jumps. Rents of non-landed private homes in the CCR went up 7.7 per cent after rising 3.8 per cent in the previous quarter. Similarly, rentals in the OCR gained 7.7 per cent, versus 4 per cent in Q1, while rents in the RCR were up 5.9 per cent, compared with 4.7 per cent previously.

Catherine He, head of research at Colliers, said: “Higher rents may be fuelled by tight supply in the market, but may moderate as more homes get completed; the number of private residential units expected to be completed in 2022-2023 will be significantly higher than the preceding 2 years. These newly completed homes will cater to those looking to rent in the near term.”

Developers launched 1,956 uncompleted private residential units (excluding executive condominiums or ECs) for sale in Q2, more than 3 times the 613 units released in Q1. ECs are a public-private housing hybrid.

They sold 2,397 private residential units (excluding ECs), higher than the 1,825 units sold in Q1.

Developers launched 616 EC units for sale in Q2 and sold 193 EC units. In comparison, developers did not launch any EC units for sale and sold 131 EC units in the previous quarter.

There were 4,236 resale transactions in Q2, compared with 3,377 units in Q1. Resale transactions accounted for nearly two thirds (62.2 per cent) of all sale transactions in Q2.

As at the end of Q2, there was a total supply of 48,836 uncompleted private residential units (excluding ECs) in the pipeline with planning approvals, up slightly from 47,415 units in the previous quarter. Supply remains tight as 15,805 units remained unsold at the end of Q2, albeit up from 14,087 units in the previous quarter.

After adding the supply of 5,333 EC units in the pipeline, there were 54,169 units in the pipeline with planning approvals. Of the EC units in the pipeline, 1,701 units remained unsold. In total, 17,506 units with planning approvals (including ECs) remained unsold.

Based on the expected completion dates reported by developers, 7,195 units (including ECs) are expected to be completed in H2 2022. Another 19,958 units (including ECs) are expected to be completed in 2023. Around 30,700 units in total will be completed in 2022 and 2023, nearly thrice the 10,400 units completed in 2020 and 2021. “This will help to cater to housing needs in the immediate term,” URA said.

URA added that apart from the 17,506 unsold units (including ECs) with planning approvals, there is a potential supply of around 8,000 units (including ECs) from Government Land Sales (GLS) sites and awarded en-bloc sale sites that have not been granted planning approval as yet. In total, around 25,500 units (including ECs) could be made available for sale later this year or next.

The stock of completed private residential units (excluding ECs) increased by 2,551 units in Q2, more than the increase of 783 units in the previous quarter.

The stock of occupied private residential units (excluding ECs) increased 2,085 units in Q2, compared with the increase of 3,544 units in the previous quarter. As a result, the vacancy rate of completed private housing units (excluding ECs) increased slightly to 5.4 per cent at the end of the second quarter, from 5.3 per cent at end-Q1.

Source: The Business Times
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