2Q2018 private condo prices up 3.4%, market heading toward new high

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July 3, 2018 2:08 AM SGT
Private home prices continued their steady ascent in 2Q2018, rising by 3.4% after climbing 3.9% in 1Q2018, according to URA flash estimates.
This marks the fourth straight quarter of growth in private home prices. With this increase, private residential prices were up by a cumulative 7.4% in the first six months of 2018, says Tricia Song, Colliers International head of research for Singapore.
While the increase in the URA price index is slightly lower than the 3.9% seen in 1Q2018, it still reflects a buoyant market where prices are on an uptrend, says Ong Teck Hui, JLL’s national director for research and consultancy.
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Prices are now only 3.6% below the last peak in 2013, with the market heading towards another peak, says Christine Li, senior director of research at Cushman & Wakefield Singapore. She believes that Singapore property prices are likely to recover to the 2013 peak levels in one or two quarters’ time.

Prices up 9.1% from trough in 2Q2017

According to Li, the broad-based recovery in the residential sector began only in 2Q2017, and prices have already risen 9.1% since then. To put things in perspective, it took eight rounds of property cooling measures to successfully rein in the prices, but the magnitude of the decline was just 11.6% over 15 consecutive quarters, she adds.
The uptick in prices in 2Q2018 was broad-based, but prices in the Rest of Central Region (RCR) led the increase – climbing 5.7%. The Core Central Region (CCR) inched up 1.4% and the Outside Central Region (OCR) saw a 2.9% rise.
Volume of transactions in the RCR rose 34.2% in 2Q2018 (based on caveats recorded to-date) while the overall median price of $1,665 psf during the quarter was 12.7% higher than that in 1Q2018, notes JLL’s Ong. In 2Q2018, new sales in the RCR non-landed market accounted for 45.8% of its transaction volume, significantly higher than 31.7% in the first quarter.
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Sharper price growth in RCR

The sharper price growth in the RCR over the past quarter was also due to the higher prices transacted at new launches – 13% to 25% above comparable projects launched over the past 12-18 months, notes Colliers’ Song. Amber 45 sold 86 units at a median price of $2,378 psf in May; Park Place Residences at Paya Lebar Quarter sold 187 units at a median price of $2,045 psf; and Margaret Ville sold 114 units at a median price of $1,871psf.
Buyers are still attracted due to either limited supply in the locality and attractive project attributes such as unblocked view and an efficient layout, Song reckons.
Park Colonial, Woodleigh Residences, Tre Ver and Stirling Residences are some of the major upcoming launches in the RCR which Song says, could drive demand given their location closer to the MRT station and within areas with demand catchment.
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“Price growth could slow from the high in 2Q2018,” says Song. “The deluge of supply in these locations may also prompt developers to price their projects or pace their launches prudently.”

Slower pace of price growth in OCR

OCR home prices saw a slower pace of increase in 2Q2018 – 2.9% compared to 5.6% growth in 1Q2018. The growth slowed down sequentially as the launch of The Tapestry in Tampines set benchmark prices in 1Q2018.
In 2Q2018, several project launches could have contributed to the price increase, including Twin Vew which sold 446 units at a median price of $1,383 psf, Affinity at Serangoon which sold 104 units at $1,586 psf, and The Garden Residences which sold 66 units at $1,662 psf.
Coming up is the launch of Riverfront Residences in Hougang Ave 7 on July 7, and the preview of The Jovell at Flora Drive the same weekend.
Colliers’ Song expects prices in OCR to grow at a measured pace as the market digests the supply.

More upside for CCR prices

Similarly, prices rose at a slower clip in the CCR – up 1.4% in 2Q2018 compared to 5.5% increase in 1Q2018. This came off a higher base set by New Futura and Wallich Residence in 1Q2018.
In 2Q2018, the only new launch in CCR was 120 Grange which sold 41 units at $3,165 psf. Nonetheless, momentum appears to be positive, with continued sales in New Futura, Gramercy Park and Marina One Residences, notes Colliers’ Song.
She expects more upside for CCR prices in light of the pipeline of new residential developments – from government land tenders and collective sale market - that could be launched in the coming quarters. These include 3 Orchard By-The-Park, located next to the Cuscaden Road site and Park House en bloc site, both of which fetched benchmark land rates over the past quarter; South Beach Residences; 8 St Thomas; and One Draycott.
With two strong quarters, Colliers has revised its forecast for private home price increase to 12% for the full 2018, from 8%. “We believe competition from launches, prevailing loan curbs and price sensitivity among prospective buyers should continue to keep price increases in check,” says Song.