1Q2018 sees highest quarterly price gain in eight years
By Timothy Tay
/ EdgeProp |
The first quarter of 2018 saw private-home prices increase 3.9% q-o-q, higher than the 3.1% in the URA flash estimate announced at the start of the month. “It is rare to see such a wide variance between the actual and flash numbers,” says Tricia Song, Colliers International head of research for Singapore. “That said, this is not surprising, given that home buying activity was brisk towards the end of March and units sold were generally pricier.”
The biggest growth in non-landed private residential prices was in the prime districts, or Core Central Region (CCR), which rose 5.5% q-o-q, and in the suburbs, or Outside Central Region (OCR), which saw a 5.6% price appreciation over the quarter. The city fringe, or Rest of Central Region (RCR), registered only a 1.2% price increase over the three-month period.
The 3.9% increase is also the highest quarterly growth since the 5.3% appreciation in 2Q2010, according to Christine Li, Cushman & Wakefield senior director of research.
Private residential prices at end- 1Q2018 were 5.5% above the trough in 2Q2017, but still 6.8% below the peak in 3Q2013, points out Colliers’ Song.
Meanwhile, rents of private homes rose 0.3% q-o-q in 1Q2018 — marking the first uptick since 3Q2013, adds Song. The vacancy rate of completed private residential units (excluding executive condos) dropped to 7.4%, from 7.8% at end-4Q2017. With supply easing, occupancy rates could improve and Colliers expects rents to recover by 2% in 2018.
Displaced homeowners and tenants from the spate of collective sales could underpin rental demand in the coming months, adds Cushman & Wakefield’s Li. The housing supply pipeline is expected to remain low between this year and 2021, with the majority of new supply from the redevelopment of collective sale sites and new projects on government land sites to be completed in 2022 and beyond, she estimates.
“Government intervention at this juncture is unlikely,” adds Li. Based on data from the Department of Statistics, median income rose 66% between 2007 and 2017, whereas URA’s private property price index rose only 6% in the period. Thus, housing demand was supported by both strong liquidity and a low interest rate environment.
New projects in OCR with high transaction volumes and where developers were able to raise the prices of remaining units in 1Q2018 include Grandeur Park Residences (median price of $1,525 psf), Parc Botannia ($1,283 psf), Seaside Residences ($1,684 psf) and Kingsford Waterbay ($1,365 psf), says Ong Teck Hui, JLL national director of research and consultancy.
In late March, the launch and take-up of The Tapestry at higher prices (median of $1,408 psf) — compared with its surrounding projects — may also have contributed to the spike in the final 1Q2018 price index compared with the flash estimate of 3.8% growth in OCR, notes Colliers’ Song.
New projects in the prime districts that contributed to a 5.5% rise in CCR prices in the flash estimates included 8 Hullet (median price of $3,490 psf) and Martin Modern ($2,772 psf), up 6.5% from February, says Ong.
With more new launches entering the market at “optimistic prices”, Ong reckons the private property price index will continue to rise “3% to 5% a quarter”.
On the weekend of April 28 and 29, UOL Group previewed Amber 45, its freehold condo on Amber Road in prime District 15. More than 3,000 people turned up for the preview. The 139-unit project has a mix of two- to four-bedroom units ranging from 614 to 1,798 sq ft. The project is expected be priced between $2,200 and $2,400 psf when sales begin on May 12 and 13.
More than 3,000 people visited the sales gallery of Amber 45 on the weekend of April 28 and 29 (Picture: James Chua)
There is a potential supply of 20,100 units to be launched this year — with 6,900 units from Government Land Sales sites and 13,200 units from en bloc sites. And these are expected to be completed by 2021 or later, notes Desmond Sim, CBRE executive director of research for Singapore and Southeast Asia. “However, the supply from en bloc sites will be subject to various approvals,” he adds.
Sim maintains that new-home sales will continue to be driven by total price quantum. In the first quarter, 80% of total transactions were of units below $2 million, while 83.6% of developer sales were below $2 million, he points out. He therefore expects the number of new residential units to shrink to keep the total quantum affordable even as the URA residential price index is expected to pick up pace and grow 7% to 9% this year.
This article appeared in the EdgeProp Pullout #829 (May 7, 2018)
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