Private home prices grow at faster pace in Q3; landbanking slows down

For the first nine months of 2022, private home prices jumped 8.2 per cent, up from a 5.3 per cent gain in the same period in 2021. PHOTO: ST FILE

SINGAPORE – Private home prices in the third quarter grew at a faster pace of 3.8 per cent despite rising interest rates, as strong sales at new benchmark prices set by suburban launches fuelled price strength in the non-landed segment.

The price growth was higher than the Urban Redevelopment Authority’s (URA) flash estimate of 3.4 per cent, and the 3.5 per cent gain in the second quarter.

Data released by URA on Friday showed that the increase in the overall private home price index for the 10th straight quarter was led by non-landed properties, whose prices rose by 4.4 per cent after a 3.6 per cent jump in the prior quarter.

Weaker sales of landed properties crimped this segment’s price growth to 1.6 per cent in the third quarter, compared with a 2.9 per cent gain in the second quarter. But overall, for the first nine months of 2022, private home prices jumped 8.2 per cent, up from a 5.3 per cent gain in the same period in 2021.

By market segment, prices in the suburbs saw the biggest gain of 7.5 per cent – the steepest quarterly increase since third-quarter 2009 at 16.1 per cent – and up from a 2.1 per cent rise in the second quarter.

Three out of the five top condo sellers in the third quarter were in the suburbs, which benefited from pent-up demand amid a lack of new supply in recent years. AMO Residence, Lentor Modern and Sky Eden@Bedok had robust sales at benchmark prices averaging above $2,100 per sq ft (psf).

Prices in the prime district continued to recover, with a 2.3 per cent gain in the third quarter from the 1.9 per cent growth in the previous quarter. In the city fringe, price growth moderated to 2.8 per cent in the third quarter, from 6.4 per cent in the second quarter, due to a lack of fresh project launches.

Huttons Asia senior research director Lee Sze Teck attributed the price recovery in the prime district to stronger sales in the third quarter, as the price gap between this segment and the city fringe has narrowed.

“The estimated median psf of new homes in the city fringe stands at $2,431, 13.5 per cent lower than the median psf in the prime district,” he said.

Developers are likely to pace their launches and recalibrate their marketing strategies as demand slows due to higher interest rates, property curbs and an expected economic slowdown, Cushman & Wakefield’s head of research Wong Xian Yang said.

But this may not push developers to reduce future new launch prices because unsold inventory remains low at 15,777 units in the third quarter, versus a 10-year annual average of 26,953 units, while land acquisition and construction costs are high, he added.

He said developers have turned cautious despite low unsold stock.

“Since August, there haven’t been major collective sale deals concluded. Recent GLS (Government Land Sales) tenders closed in September also fetched fewer bids than expected. These could signal a slowdown in developers’ land acquisition activities amid concern over rising interest rates, inflationary pressure, construction costs and macroeconomic headwinds. Recent cooling measures also tightened financing conditions,” Mr Wong said.

Ms Catherine He, director and head of research for Singapore at Colliers, said substantial new home supply in the coming months will further moderate price and rental growth.

During the third quarter, developers launched 1,455 uncompleted private homes (excluding executive condominiums, or ECs) for sale, down from 1,956 units in the previous quarter. They moved 2,187 private homes, down from 2,397 sold in the second quarter. In the third quarter, no EC units were launched and 28 were sold.

Rising interest rates and macroeconomic uncertainty also took their toll on resale volumes, which slipped to 3,719 units from 4,236 units in the previous quarter, said Ms Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie.

URA data showed that private home rents climbed by 8.6 per cent in the third quarter from 6.7 per cent in the second quarter.

Over the past nine months, rents soared by 20.8 per cent due to delays in construction completions and an influx of residents and workers as border restrictions eased, said Mr Lam Chern Woon, head of research and consulting at Edmund Tie.

Ms Sun noted that tenants were signing longer leases of up to three years to secure units and lock in better rates, which will shrink rental volume. Also intensifying demand, private home owners buying unsubsidised Housing Board resale flats – who are affected by the 15-month wait-out period – may also rent, she added. 

Rents were higher for both landed and non-landed properties. Rents for landed properties surged by 10.9 per cent, compared with a 3.2 per cent rise previously. Those for non-landed properties surged by 8.3 per cent, compared with a 7.1 per cent gain in the previous quarter.

The city fringe saw the biggest increase in rents at 9.6 per cent. This is compared with an 8.8 per cent rise for the suburbs and a 7 per cent increase for the prime district in the third quarter.

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