Buyers buoyed by the expected economic rebound in Singapore piled into new homes in the first quarter and sent prices soaring above market expectations, while also raising the spectre of more cooling measures.
Data from the Urban Redevelopment Authority (URA) released yesterday showed the private home price index shot up 3.3 per cent from the previous three months - eclipsing its flash estimate of 2.9 per cent.
This marked the fourth consecutive quarterly rise and the steepest increase since the second quarter of 2018, when private home prices advanced 3.4 per cent before property curbs hit in July that year.
Prices have been picking up momentum: they rose 2.1 per cent in the fourth quarter and are up 6.6 per cent year on year. Private home prices are now 8.4 per cent above the recent peak in the third quarter 2018 and 4.9 per cent ahead of the all-time high hit in the third quarter 2013.
Prices are tipped to keep heading north in the near term as construction delays and additional safety measures at workers' dormitories may raise costs in a market already constricted by supply lags.
Coronavirus-related construction disruptions have delayed project completions.
Around 6,800 private homes are expected to be completed by the end of this year, and 11,264 next year.
"These figures are significantly lower than those provided by URA in the first quarter last year - 10,816 units to be completed in 2021 and 15,160 for 2022," noted Mr Ong Teck Hui, senior director of research and consultancy at JLL.
Mr Ong questioned if the shortage of construction workers will affect the pace of new launches as well as developers' landbanking activities. "If construction costs go up, that could affect how much they will bid for land in GLS (government land sales) and en-bloc sales," he said.
While the likelihood of more property cooling measures has risen, Colliers International research head Tricia Song noted that these could be "premature, given that the year-on-year private home price increases are still in the single digits".
"However, we do not rule out more curbs should prices outpace economic fundamentals," she added.
The first quarter's price increases were led by landed properties, which jumped 6.7 per cent, outpacing a 2.5 per cent rise in the non-landed segment.
Prices of non-landed homes in the prime or core central region grew 0.5 per cent in the first quarter compared with a 3.2 per cent rise in the fourth quarter.
But well-received new launches such as Normanton Park and The Reef At King's Dock pushed prices of apartments in the city fringe or the rest of central region up 6.1 per cent compared with a 4.4 per cent rise in the previous quarter.
Prices in the suburbs or outside central region rose 1.1 per cent, compared with a 1.8 per cent gain in the fourth quarter of 2020.
Developers capitalised on buyers' fear of missing out by launching 3,716 new private homes - the highest volume for the first quarter in seven years - up from 3,147 units put on the market in the preceding quarter and a 78 per cent increase on the same three months last year, JLL said.
The robust launches sent new home sales surging 34 per cent from the fourth quarter of 2020 to 3,493 units - the highest sales for that quarter since the first three months of 2013, JLL said.
Resale volumes also strengthened, with 4,519 units sold during the quarter, up from 4,249 units in the preceding three months.
The economic recovery coupled with fewer units being completed led to vacancy rates falling from 7 per cent in the fourth quarter last year to 6.4 per cent in the first three months of this year.
Foreigners seem to be coming back, with mainland Chinese the top buyers, said Ms Christine Sun, OrangeTee & Tie's senior vice-president of research and analytics.
There were 281 non-landed homes (excluding executive condominiums) bought by foreigners in the first quarter, up from the 199 in the fourth quarter. This is also the highest volume transacted since the fourth quarter of 2019, when 284 units were sold, she said.
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