SINGAPORE - Defying Covid-19 circuit breaker measures and a recession, private home prices in Singapore edged up 0.3 per cent in the second quarter from the previous three months, according to final data from the Urban Redevelopment Authority (URA) on Friday (July 24).
But analysts warned that a market recovery is far from certain as business closures, salary cuts and job losses will eventually take their toll in the months ahead.
The 0.3 per cent gain in the second quarter of 2020 bucked the 1.1 per cent drop in the URA's flash estimate released on July 1.
It comes after private home prices dropped 1 per cent in the first quarter of 2020, their first quarterly decline in a year.
Year on year, prices have risen 1.2 per cent from the second quarter of 2019.
"This surprising turnaround was mainly due to pent-up demand in the later half of June as showflats were opened – with safe distancing precautions – as well as viewings being allowed under stringent conditions," said Mr Leonard Tay, head of research, Knight Frank Singapore.
For the first half of 2020, overall prices of private home dipped 0.7 per cent, a very mild decline considering the unprecedented pandemic and economic disruption," he noted.
Developers launched 1,852 uncompleted private residential units excluding executive condominiums (ECs) for sale in Q2 2020, compared with 2,093 units in the previous quarter.
They sold 1,713 units (excluding ECs) in Q2, 20.3 per cent less than the 2,149 units taken up in the previous quarter.
"The imposition of the circuit breaker in April seemed to stop activity in the private residential market. However, new home sales volume picked up from the end of April as buyers got used to “transacting-from-home”, increasing by 75.8 per cent from April to May, and then more than doubling between May to June when showflats were allowed to reopen on 19 June," said Mr Tay.
The growing number of transactions as well as relative price stability in the second quarter, may prompt developers to launch more new projects in the remaining half of the year, analysts say.
Seventeen new residential projects with a total of 5,243 units will be ready for launch in the next 6 to 9 months, ERA Realty head of research and consultancy Nicholas Mak said.
"About three quarters of these units are located in the prime or core central region, which is a significantly higher proportion than that launched in 2019. Last year, 54.7 per cent of the units launched were in the core central region. This would contribute to a higher percentage of more expensive properties being transacted in the primary market, and help support prices," he said.
Still, prices may remain soft in the coming months due to growing economic uncertainties and escalating tensions. "We estimate that overall prices may dip up to 3 per cent this year," OrangeTee & Tie's head of research and consultancy Christine Sun said .
For the second quarter, prices of non-landed properties rose 0.4 per cent from the previous three months, compared with the 1 per cent drop in the previous quarter.
Giving a breakdown by region, the URA said that prices of non-landed properties in the core central region jumped 2.7 per cent in Q2, compared with the 2.2 per cent drop in the previous quarter. Prices of non-landed properties in the city fringe or rest of central region fell 1.7 per cent, compared with the 0.5 per cent fall in the previous quarter.
Prices in the suburbs or outside central region edged up 0.1 per cent, compared with the 0.4 per cent fall in the previous quarter.
The URA also said that prices of landed properties remained unchanged in the second quarter of this year, after dipping 0.9 per cent in the first quarter.
Unlike prices, rents of private residential properties weakened in the second quarter, after edging up in the first three months of the year. Rents fell 1.2 per cent in Q2 2020, compared with a rise of 1.1 per cent in the previous quarter.
Rental volume dipped below 20,000 in the second quarter, marking the first time since Q4 2017 that rental volume fell below 20,000. Huttons Asia research director Lee Sze Teck blamed rising unemployment, travel restrictions and border closures.
"The third quarter of the year is usually the busiest but this year, we do not expect volume to pick up. Rents may ease by up to 3 per cent in the second half of the year," he said.
Ms Sun noted that the bulk of the rental volume seems to be renewals as many tenants chose to renew their contracts, due in part to the difficulty arranging house movers.
Developers did not launch any EC units for sale in the second quarter, and sold 71 EC units in the quarter. In comparison, they launched 1,044 EC units and sold 590 EC units in the previous quarter.
As at the end of Q2, there was a total supply of 49,090 uncompleted private residential units (excluding ECs) in the pipeline with planning approvals, compared with 48,868 units in the previous quarter.
Of this number, 27,977 units or more than half remained unsold as at the end of Q2, compared with the 29,149 units in the previous quarter.
After adding the supply of 3,613 EC units in the pipeline, there were 52,703 units in the pipeline with planning approvals. Of the EC units in the pipeline, 1,899 remain unsold.
In total, 29,876 units with planning approvals (including ECs) remain unsold, down from 31,099 units in the previous quarter.