The second quarter of this year saw the private residential property index climb 1.3%, compared to the 0.7% decline recorded in 1Q2019, according to flash estimates released on Monday (July 1) by URA. “This is the first quarter during which prices have exceeded 1% since the imposition of cooling measures in July 2018,” says Lee Sze Teck, head of research for Huttons Asia.
Prices of non-landed properties rose 1.6% in 2Q2019, compared to a 1.1% decline in the previous quarter. Prices of landed properties rose 0.2% after registering a 1.1% increase in 1Q2019.
For the non-landed segment, prices in the Core Central Region (CCR) increased by 1.5% compared to the 3% decrease in the previous quarter, while prices in the Rest of Central Region (RCR) climbed by 3% after recording a 0.7% decrease in 1Q2019. The latest estimates also show the Outside Central Region (OCR) recording a 0.5% increase in prices, compared with a 0.2% rise in 1Q2019.
A gradual increase in sales of new projects has given confidence to some developers that buyers are increasingly receptive to a higher price point and are committing to a purchase, says Lee. “There were more launches and sales of city fringe projects with an average pricing of above $2,000 psf. This also led to some repricing for earlier launched city fringe projects and resale developments,” he says.
The recent price uptick is likely led by transactions in the CCR and RCR, as many new projects are selling at new benchmark prices for their locations in recent months, says Christine Sun, head of research and consultancy at OrangeTee & Tie.
Based on URA caveat data as of July 1, 52.7% of non-landed property transactions over the last three months came from new home sales, against resale transactions of 46.6%. Over the same period last year, new home sales made up 32.5% while resale transactions contributed 66%.
In the RCR, transactions of non-landed homes of more than $2,300 psf accounted for about 20% last quarter, compared to only 1.2% in 1Q2019. This was mainly due to high-value launches, says Ong Teck Hui, senior director of research and consultancy at JLL. Amber Park sold 157 units at a median of $2,475 psf, Sky Everton sold 100 units at a median of $2,524 psf, and Riviere sold 32 units at a median of $2,902 psf.
High-end transactions in the CCR included the sale of 34 units at Boulevard 88 at a median of $3,692 psf; the sale of 27 units at 3 Cuscaden at a median of $3,601 psf; and the sale of 17 units at South Beach Residences at a median of $3,348 psf.
Foreign buyers have also stepped up their purchases, with a 40% increase in the number of foreign buyers snapping up properties here last quarter. “The stability of the country and [the Singapore dollar] probably convinced them to invest their money here vis-a-vis other countries in the region,” says Lee.
In addition, during 2Q2019, there was a significant slowdown in the secondary market, which traditionally has been a downward drag for the price index, says Desmond Sim, head of research in Southeast Asia for CBRE.
“Comparing 1H2018 to 1H2019, there was a significant reduction of 54.3% in resale volume from 7,146 units to 3,266 units over this period,” he says. “New sales, on the other hand, remained fairly stable at 3,874 units in 1H2019 vis-a-vis 3,688 units in 1H2018.”
But the recent price hike is likely to be an outlier as developers are still unfazed by the sell-by deadline and are unlikely to reduce prices. More new projects are also expected to be launch-ready in the near term that will add more pressure on the rising unsold inventory, Sim says.
However, JLL’s Ong says the latest flash estimates show that there is firm demand for new high-end homes in the CCR and in “attractive locations” in the RCR despite the cooling measures. “This should augur well for potential launches with such attributes as there is a fair chance of them achieving better sales take-up.”