SINGAPORE (EDGEPROP) - The URA overall private residential price index showed a 0.8% q-o-q increase in 2Q2021, a deceleration from the 3.3% rise in the previous quarter. “As private home prices have already grown 6.6% from 2Q2020 to 1Q2021, continued strong quarterly price increases may not be sustainable as prices could reach resistance levels,” says Ong Teck Hui, JLL senior director of research & consultancy. (See also: [UPDATE] Projects completing between now and 2023: What to look out for)
This 0.8% increase in 2Q2021 is slightly lower than the 0.9% flash estimate increase on July 1. Residential price growth in 2Q2021 was driven by the non-landed segment, particularly the suburban or Outside Central Region (OCR), where prices rose 1.9% q-o-q, after a 1.1% increase the previous quarter. “Stronger price growth in OCR was supported by healthy demand for entry-level condos from HDB upgraders on the back of a robust performance in the HDB resale market in recent quarters,” says Wong Xian Yang, Cushman & Wakefield (C&W) head of research, Singapore.
HDB resale price index rose 3% q-o-q in 2Q2021, extending the quarterly 3% increase of the previous quarter. It was up 11 y-o-y in 2Q2021. (See: Find HDB flats for rent or sale with our Singapore HDB directory)
In 2Q2021, developers launched 2,356 new homes, 36.6% lower than the previous quarter. New home sales totalled 2,966 units over the same period, a q-o-q contraction of 15.1% from 1Q2021.
The greatest growth in sales for the quarter was recorded in the prime districts or Core Central Region (CCR), where prices advanced 1.1% in 2Q2021, more than double the 0.5% growth in 1Q2021, says C&W’s Wong. The price growth was supported by strong sales and high unit prices of new projects, for example, the 54-unit, luxury condo Park Nova, which moved 13 units at a median price of $4,971 psf in 2Q2021.
The city fringe or Rest of Central Region (RCR) likewise showed resilience: volume of project launches plunged 75.1%, but the level of transactions contracted by just 37.5% in 2Q2021, notes Lam Chern Woon, Edmund Tie head of research & consultancy. RCR prices nudged higher by 0.1% q-o-q, compared to 6.1% in the previous quarter.
The landed housing price index, however, dipped 0.3% in 2Q2021, after a 6.7% price surge in 1Q2021. “The 0.3% softening in the index shows that landed prices have already overshot demand by spiking 6.7% in 1Q2021 and have to correct to a more appropriate level,” notes JLL’s Ong.
The resale market gained momentum in 2Q2021, with transaction volume 18% higher at 5,333 units. Share of resales increased to 63.1% in 2Q2021, from 55.8% in 1Q2021. The volume of resales in 2Q2021 is the highest since 3Q2009, which clocked 5,809 units, according to C&W.
“Given the significant delay in construction progress of housing projects across Singapore as well as developers holding back new launches, many buyers had to turn to the resale market for more options,” says Wong of C&W.
Sub-sales rose 1.8% in 2Q2021 from 1.1% the previous quarter. “The marked increase in sub-sales, especially in the RCR and OCR segments, is a cause of concern,” notes Edmund Tie’s Lam. “It suggests that there is distress in various pockets of the housing market. With the seller’s stamp duty regime in place, sub-sale transactions are likely to be loss-making in this climate.”
Resale transactions in 1H2021 were at 91.8% of the previous year’s total of 10,729 units. PropNex research is expecting resales for the full year to surpass 16,000 units.
Unsold housing stock dipped below the 20,000 mark to 19,384 units, according to Edmund Tie’s Lam. Completed and unsold units stood at a mere 25 units last quarter. “The low inventory will underpin demand for new project launches although the showroom capacity restrictions may put a lid on viewings and transactions in the near term,” says Lam.
The level of unsold stock is a 48.7% drop from the peak of 37,799 units in 1Q2019, following nine consecutive quarters of decline. “Due to the continuous decline in unsold inventory, developers continue to seek out sites to replenish their land banks from private land sales such as en bloc/collective sales and Government Land Sales (GLS),” says JLL’s Ong.
This was evident from the strong bidding at the tender closing for the GLS sites at Lentor Central and Tampines Street 62 (Parcel A) on July 22. The optimistic top bids at $1,204 psf per plot ratio (psf ppr) for Lentor Central and $659 psf ppr for the executive condominium site at Tampines Street 62 show that residential land prices are rising.
“Residential land prices are expected to continue rising as unsold inventory declines and developers compete keenly for new sites,” adds Ong.
New private home sales in 1H2021 stood at 6,459 units, 67% higher y-o-y compared to 1H2020. “It’s the highest volume of first-half sales since 2013,” says C&W’s Wong.
“Total new sales could be higher if not for dwindling unsold inventory and higher alert restrictions which has led to a delay in some launches,” he says.
Sales volume for part of 3Q2021 is likely to be affected by the return to tighter measures of Phase 2 Heightened Alert (P2HA), according to JLL’s Ong. “Price increase in this quarter is expected to be modest,” he says. “Both buyers and sellers are likely to be more cautious due to the uncertainty caused by the infection spread.”
However, the private residential market remained resilient in 2Q2021 despite entering P2HA in May and June, says Ismail Gafoor, CEO of PropNex. The return to P2HA from 22 July to 18 August, prompted some launches that were initially planned for July — such as The Watergardens at Canberra and Parc Greenwich executive condo (EC) — to be deferred.
“While the return to P2HA may pose some uncertainty for developers in terms of launch activities over the next month or so, we do not expect it to put a dent on home demand nor impact prices significantly,” adds Gafoor.
PropNex is expecting new private home sales (excluding executive condos) to end the year at 11,000 to 12,000 units. “This represents a 10% to 20% increase from 9,892 units last year,” says Gafoor. He projects that 2021 will end with a 6% to 7% price growth, supported by primary market sales as several new projects are slated for launch. (See: Discover insightful data of any Singapore condominium with our condo directory)
With 1H2021 price growth at 4.1%, prices are 7.1% higher y-o-y in 2Q2021, according to CBRE Research. Compared to the trough of 1Q2020, prices are up 7.5%. Tricia Song, CBRE head of research for Southeast Asia is expecting home prices to rise 6% to 8% this year.
CBRE expects new home sales for 2021 to hit 10,000 to 11,000 units, with demand supported by upcoming mass-market launches. “Strong HDB resale prices will provide a steady pool of upgraders,” she says. Separately, HDB resale price index grew 3.0% q-o-q and 11.0% y-o-y in 2Q2021.
“The return to P2HA is just a temporary setback,” says Mark Yip, CEO of Huttons Asia. “Even if new home sales were to settle to an average of 700 to 900 units per month for 2H2021, total sales volume for 2021 is expected to be more than 10,000 and possibly 12,000 units,” he adds. “This will be the highest annual sales since 2013. Prices are estimated to rise by as much as 8% for the whole year.”