Sat, January 23, 2021 – 5:50 a.m.
UPDATED Tue, January 26, 2021 – 11:32 a.m.
Prices for new private homes in Singapore rose 2.1 percent in the fourth quarter of 2020 compared to the third quarter, marking the strongest quarterly increase in over two years.
For 2020 as a whole, the price index rose 2.2 percent, a little slower than the 2.7 percent increase in 2019, as the final figures from the Urban Development Agency (URA) showed on Friday. This week, Deputy Prime Minister Heng Swee Keat said the government was “paying close attention” to the local property market “to ensure it remains stable”.
Household prices are now 1.6 percent above their peak in Q3 2013 and 4.9 percent above their most recent peak in Q3 2018, according to Colliers International research director Tricia Song.
The most recent quarterly uptrend was mainly driven by unlanded properties in the rest of the central region (RCR) and the central core region (CCR).
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Unlanded home prices in the RCR or on the outskirts of the city accelerated to 4.4 percent after growing 2.5 percent in the past three months. Wong Siew Ying, director of research and content at PropNex, noted that new launches such as The Linq @ Beauty World and The Landmark helped prop up prices in the region.
In the CCR, unlanded home prices rose 3.2 percent, reversing the 3.8 percent decrease in the third quarter, likely due to higher average prices on previously launched projects, Ms. Wong said.
Houses in the outer region (OCR) or in suburbs that had not landed recorded a price increase of 1.8 percent, slightly faster than the increase of 1.7 percent in the previous quarter. Clavon and Ki Residences At Brookvale, both opened in December, contributed to growth in this mass market region, according to Ms. Wong.
Average fourth-quarter prices were S $ 1,637 per square foot (psf) for Clavon and S $ 1,766 per square foot (psf) for Ki Residences, above the OCR average price of S $ 1,632 psf.
Christine Sun, director of research and analysis at OrangeTee & Tie, said the general upward trend is to be expected as many projects increased their sales prices in the last quarter.
Throughout last year, total unlanded home prices rose 2.5 percent, faster than the 1.9 percent increase in 2019. Landed home prices rose 1.2 percent in 2020 but fell in the fourth Quarter by 1.6 percent. (see change notice)
Nicholas Mak, ERA’s Head of Research and Advisory, noted that when the debt-to-GDP ratio was introduced in June 2013, private property prices fell from Q3 2013 to Q2 2017. It took until the 4th quarter of 2020 – more than seven years – for household prices to recover from the losses caused by government intervention, he wrote.
Developers sold 2,603 new homes in the fourth quarter. (That number doesn’t include executive condos or ECs, a hybrid of private and public housing.) That’s 26 percent less than the 3,517 units moved in the third quarter.
Despite the quarter-on-quarter decline, the latest reading was its best performance for the October-December period since 2012, when 4,353 units were sold in the primary market, ERA said. Before the pandemic, November and December – when people were on vacation – were typically a slump in real estate.
The transaction volume in the fourth quarter rose by 6.5 percent compared to the previous year. Desmond Sim, CBRE Research Director for Southeast Asia, noted that the renewed positive mood was fueled by the robust uptake of newly launched, well-located and relatively affordable projects. Low interest rates have also boosted investor purchasing power.
The total annual record for new home sales by developers without ECs was 9,982 units in 2020, up from 9,912 in 2019. Ms. Sun described last year’s demand as “surprisingly dynamic” with Covid-19 lockdown and travel restricted .
On the EU front, developers achieved fewer sales in the fourth quarter (133 units) than in the third (164 units) of the previous year. In 2020, developers sold 958 EC units, almost twice as many as in the previous year.
Colliers’ wife Song expects private home prices to rise 3 to 5 percent this year to track economic growth. “The positive momentum in the sales and price index could continue into 2021, but the specter of further slowdowns – if prices beat economic fundamentals – should moderate that momentum,” she said.
The supply in the pipeline – i.e. new development or renovation projects with planning permits – continued to decline. At the end of December, a total of 26,426 units (including ECs) with planning permits had not been sold, up from 28,727 at the end of September and 32,272 a year ago.
This year, the market could swing back in favor of sellers as the housing stock plummets amid robust demand and a sharp decline in land sales in recent years, Ms. Sun said.
Referring to this year’s launch, Mr Sim of CBRE said their locations in CCR and RCR could limit their buyer pools, slightly reducing the total size of the new home market to around 8,000-9,000 units in 2021.
Change notice: An earlier version of this article incorrectly stated that the prices of unlanded homes rose 2.2 percent in 2020, slower than the 2.7 percent increase in 2019. They rose 2.5 percent in the 2020, faster than the 1.9 percent increase in 2019. the previous year.