Private home prices in surprise rise to five-year high; analysts divided on where they are headed

Prices of non-landed private residential properties rose by 1.5 per cent in the Core Central Region compared to the 3 per cent fall in the previous quarter.
Prices of non-landed private residential properties rose by 1.5 per cent in the Core Central Region compared to the 3 per cent fall in the previous quarter.PHOTO: ST FILE

Private residential property prices rallied in the second quarter to hit a five-year high, flash estimates noted yesterday.

Increases in the city centre and city fringe helped lift the price index by 1.3 per cent to 150.5 points - the highest since the first quarter of 2014, when the index was at 151.3. The rise for the three months to June 30 comes after a 0.7 per cent decrease in the first quarter.

Ms Christine Li, head of research for Singapore and South-east Asia at Cushman & Wakefield, said the increase was unexpected given renewed global market volatility and the China-United States trade war.

She pointed to Singapore's status as a "safe haven", which helped sustain sales even amid uncertain times.

"This shows that investors and buyers are still positive on the long-term prospects of the residential market and take the short-term volatility in their stride," said Ms Li.

Yesterday's flash estimates from the Urban Redevelopment Authority (URA) showed increases across the island.

Prices of non-landed private homes rose 1.5 per cent in the core central region compared with the 3 per cent fall in the previous quarter. The rest of central region recorded a 3 per cent rise after the 0.7 per cent decline in the first quarter.

The rise for the three months to June 30 comes after a 0.7 per cent decrease in the first quarter.

Values in the outside central region increased 0.5 per cent following last quarter's 0.2 per cent lift.

Ms Christine Sun, OrangeTee & Tie's head of research and consultancy, pointed to new home sales as a big factor in the upturn, noting that many projects have been selling at new benchmark prices for their locations in recent months.

Her analysis of URA data shows that 367 new homes in the rest of central region were sold at $2,000 per sq ft (psf) or more in the second quarter compared with just 31 in the previous three months.

JLL senior director of research and consultancy Ong Teck Hui said last year's cooling measures did not seem to deter some buyers.

 
 
 
 

"The key observation from the flash estimates is the firm demand for new high-end homes in (the city centre) as well as attractive locations in the (rest of central region) in spite of the cooling measures, which do not seem to deter buyers who are keen on such properties," he said. "This should augur well for potential launches with such attributes as there is a fair chance of them achieving better sales take-up."

The estimates were compiled based on prices given in contracts submitted for stamp duty payment and data on units sold by developers until mid-June. They will be updated on July 26.

Analysts were split on price direction.

Mr Desmond Sim, CBRE's head of research for Singapore and South-east Asia, believes the rise in the index is a mere blip, and it will remain "relatively stable with downward pressure coming only in the mid to long term" because of the uncertain global economy and rising inventory.

On the other hand, OrangeTee & Tie is forecasting price increases of between 1 per cent and 3 per cent for the whole of this year, while Morgan Stanley analyst Wilson Ng expects price growth to be sustained.

Meanwhile, Housing Board resale flat prices dipped 0.2 per cent in the second quarter compared with the previous three months, according to HDB flash estimates yesterday.


Correction note: The quote by JLL senior director of research and consultancy Ong Teck Hui has been edited for clarity.

A version of this article appeared in the print edition of The Straits Times on July 02, 2019, with the headline 'Private property prices hit five-year high: Flash data'. Print Edition | Subscribe