The recovery in prices and transactions of private homes is expected to continue this year due to pent-up demand, improved sentiments and new launches by developers, consultants say.
Rents, too, will likely find their footing in the second half of the year, thanks to a steep fall in completions of new homes.
But favourable supply conditions may not stay interminably, with the Government flagging a potential supply of 19,900 units from land sale sites that have yet to be granted planning approvals. These could be made available for sale later this year or next year, and be completed from 2021 onwards.
This is on top of the 19,755 unsold uncompleted units with planning approval as at end-2017.
Figures released by the Urban Redevelopment Authority yesterday showed a 1.1 per cent rise in prices and 53 per cent surge in all private residential transactions to 25,010 units last year. This broke a price fall lasting over three years since the third quarter of 2013, and followed a 3.1 per cent drop in prices and 16 per cent rise in transactions in 2016.
The price rebound was led by non-landed properties, whose prices rose 0.8 per cent during the three months to December, and 1.3 per cent for the full year. The prime area or Core Central Region led the price recovery in the fourth quarter with a 1.4 per cent rise. For the full year, the city fringe or Rest of Central Region saw the strongest price uptick of 1.8 per cent.
While rents continued to fall 1.9 per cent last year, analysts did see improved occupancies. The vacancy rate for completed private homes improved to 7.8 per cent at the end of the fourth quarter, from 8.4 per cent a year ago. The 1.9 per cent full-year rental decline in 2017 was also less severe than the 4 per cent drop the preceding year.
"The good news is vacancy is improving and could hit a critical inflection point in 2018," said Ms Tricia Song, Singapore research head at Colliers International. "Rents could resume a growth trajectory when most of the new supply that has been completed over the past two years is gradually digested over the next six to 12 months."
ZACD Group executive director Nicholas Mak expects 10,000 private housing units to be completed this year, down from the average of 17,000 new units being occupied per year from 2015 to 2017.
The resale market made up 56 per cent of residential transactions last year, amid a 78 per cent surge in resales to 14,043 units.
Developers also sold more units than they launched last year. While they put 6,020 new private units and 1,555 executive condominium (EC) units on the market, they sold 10,566 new private units and 4,011 EC units. Their total sales jumped by 22 per cent from 2016.
Consultants are expecting more launches by developers this year.