Flash estimates showed private residential property prices rising at an increasing rate of 0.8% in Q3 2020 on the back of pent-up demand, reflecting market resilience
- Private residential property prices in Singapore rose in Q3 2020 for the second straight quarter, on pent-up demand and bucking the worsening macroeconomic conditions.
Flash estimates from the Urban Redevelopment Authority (URA) on Thursday, 1 October, showed that private residential property prices grew at an increasing rate of 0.8% quarter-on-quarter (QOQ) in Q3 2020, after rising 0.3% in Q2. This brings private home prices to be up 0.1% year-to-date (YTD) in 2020.
Private residential property prices are now 2.7% above the most recent peak in Q3 2018 and 0.5% below its all-time peak in Q3 2013.
Based on caveats downloaded on 1 October 2020, developers sold 2,844 new private homes, excluding Executive Condominiums (ECs) in Q3 2020 – up by 66.0% QOQ (1,713 in Q2 2020) from a circuit breaker- disrupted Q2, but still a decline of 13.3% year-on-year (YOY) (3,281 in Q3 2019).
The rebound in resales was more significant as the circuit breaker in April to early June affected the secondary market more than the primary market. The number of secondary sales jumped 185.3% QOQ and 9.3% YOY to 2,713 units in Q3 2020.
Core Central Region (CCR)
According to URA’s data, prices in the CCR declined 4.9% in Q3 from the previous quarter, after rising an unexpected 2.7% QOQ in Q2 2020. This brings CCR home prices to a 4.5% decline YTD.
CCR home price index is now 7.1% below its recent peak in Q3 2018 and 9.3% below its all-time peak in Q3 2013.
A closer look at the transactions during the quarter suggests that there were sporadic distressed sales in the secondary market. The decrease in Q3 non-landed CCR prices could also be due to discounts offered at selected ongoing launches:
- Leedon Green recorded 15 caveats in Q3 at a median price of S$2,546 psf, compared to 35 units sold at S$2,782 psf when it was launched in January 2020;
- 8 Saint Thomas recorded 19 caveats in Q3 at a median price of S$2,793 psf compared to earlier units sold at S$3,100-3,200 psf
- Fourth Avenue Residences sold 57 units in Q3 at a median price of S$2,238 psf, compared to its 2019 average launch price of S$2,400-2,450 psf
- The Avenir sold 22 units in Q3 at a median price of S$3,075 psf, compared to 18 units sold at a median price of S$3,245 psf in Q1 2020, when it was launched.
Rest of Central Region (RCR)
Home values in RCR rose 3.3% QOQ in Q3, after declining 1.7% in Q2. This brings RCR home prices to a year-to-date increase of 1.0%. RCR home price index is now just 0.4% below the peak in Q3 2013.
The popular large launches such as Parc Esta, Stirling Residences and Jadescape have sold 87, 86 and 155 units respectively in Q3 and we note that their prices have inched up as they sold down their inventory. Stirling Residences has seen its median price cross S$2,000 psf at S$2,004 psf in Q3, compared to the median price of S$1,746psf during its launch in July 2018.
Outside Central Region (OCR)
Non-landed home values in OCR rose at an increasing rate, with a 1.7% QOQ increase in Q3 following a 0.1% increase in Q2 2020. This brings OCR home prices to a year-to-date increase of 1.4%.
The resilient trend could also be driven by upgraders’ demand, as public housing by the Singapore Housing Development Board (HDB) prices from the Q3 HDB resale price index flash estimate also showed a 1.4% increase.
We believe the resilience in OCR home prices is due to their relative affordability and lack of future new supply in OCR. In particular, some earlier launches such as Treasure at Tampines and Florence Residences continued their progressive take-up::
- Florence Residences sold 156 units at a median price of S$1,559 psf in Q3, compared to 149 units at S$1,513 psf in Q2 2020;
- Treasure at Tampines moved 296 units at S$1,353 psf in Q3, compared to 185 units at S$1,357 psf in Q2.
Opining on the outlook of the private residential property prices, Ms Tricia Song, Head of Research for Singapore at Colliers International, said:
“Private residential property prices in Singapore rose in Q3 2020 for the second straight quarter, on pent-up demand and bucking the worsening macroeconomic conditions.
“With showflats allowed to reopen with effect from 19 June and as Singapore advanced to Phase 2 after exiting the circuit breaker on 2 June, there is evidence of pent-up demand with the significant pick-up in developer sales.
“The demand recovery is broad-based as the number of secondary sales also recovered, jumping 185.3% QOQ and 9.3% YOY to 2,713 units in Q3 2020.
“On 28 September, URA announced a clampdown on the re-issuing of option-to-purchase (OTP) to the same buyers of the same unit, by developers. We expect this to have a slight cooling effect on the developer sales from now on, as it should instil greater financial prudence in making property purchase decisions and prevent some marginal buyers from committing prematurely.
“With home prices highly correlated to household income and job security, we had expected private residential prices to fall 5% in 2020, in line with the economic contraction. However, with the resilience of the market and price index up 0.1% year-to-date at this point, we now expect prices could be flat in 2020.
“Based on caveats recorded in Q3, year-to-date developer sales now tally 6,708 units. Recent launches have also been well-received, with Penrose condominium selling 60% or 341 units on its first weekend of launch.
We now expect full-year 2020 developer sales may well be 8,900 units or just 10% below 2019’s 9912 units.”