Singapore private home prices rise by 0.8% in Q3 amid recession

Private home prices have edged up 0.1 per cent to date in 2020.
Private home prices have edged up 0.1 per cent to date in 2020.ST PHOTO: KUA CHEE SIONG

SINGAPORE - Private home prices in Singapore continued to surprise on the upside despite the pandemic-induced recession, with a 0.8 per cent gain in the third quarter from the previous three months, according to final data from the Urban Redevelopment Authority (URA) on Friday (Oct 23).

The figure was unchanged from URA's flash estimate released on Oct 1.

After a 1 per cent drop in the first quarter of 2020, the first quarterly decline in a year, prices began trending upwards again with a 0.3 per cent rise in the second quarter. With the third-quarter increase, private home prices have edged up 0.1 per cent in the first nine months of this year.

The third-quarter price increase was driven by landed homes and a burst of buying in the city fringes and suburbs after the two-month circuit breaker ended on June 1, said Ms Christine Sun, OrangeTee & Tie's head of research and consultancy. 

"Many long-term investors and wealthy buyers are on the prowl for properties as many are repositioning their wealth from riskier assets," Ms Sun said. 

In the first nine months of this year, nearly 80 per cent of new private homes sold were bought by Singaporeans – representing the highest proportion since 2010, Mr Ismail Gafoor, chief executive of PropNex, said, citing Realis data.

Despite keen buying interest, Mr Ismail believes that new home sales activity could moderate in the final quarter of 2020 due to the recent clampdown on the practice of some developers reissuing a buyer’s option to purchase (OTP) multiple times.

The number of foreigners buying nearly doubled to 225 in Q3 2020 from 119 in Q2 2020 despite travel restrictions, due possibly to more foreign companies setting up operations in Singapore and record low interest rates, noted Mr Lee Sze Teck, Huttons Asia director of research. 

In the third quarter, the bulk of foreign buyers were from China, with the rest from Malaysia, India, USA and Indonesia, he said. 

Separately on Friday, data showed the HDB resale market roared to life in the third quarter, with resale volume at 7,787 flats - the highest in ten years. Prices of resale HDB flats also rose, by 1.5 per cent quarter on quarter, the fastest rate of growth in the past eight years.

According to URA's final data, the total number of residential transactions, excluding executive condominums (ECs), spiked by 164.5 per cent from 2,664 units in the second quarter to 7,047 units in the third quarter, she noted. 

Developers sold 3,517 units (excluding  ECs), up 105 per cent from the 1,713 units taken up in the second quarter. They launched 3,791 units (excluding ECs), compared with 1,852 units in the previous quarter.

Ms Sun said: "Investor exuberance for real estate properties seemed to have spilt over from the primary market to the secondary market."

The resale market registered a steeper quarter-on-quarter increase of 271.6 per cent from 933 units to 3,467 units in the third quarter. Resale homes also accounted for a bigger proportion of total sales at 49.2 per cent, when compared with the 35 per cent in the preceding quarter, Ms Sun said. 

For the third quarter, prices of non-landed properties rose 0.1 per cent from the previous three months, compared with the 0.4 per cent increase in the previous quarter.

Analysts said that although a Covid-19 recession has hit Singapore, with the aviation and tourism sectors worst off, other segments of the economy, such as technology, precision manufacturing, healthcare and biomed, are holding up. Those not affected may still have the confidence to buy, they said.

Further, in the years preceding the pandemic, private home price increases have been somewhat marginal, due largely to the slew of cooling measures. This is unlike the years preceding the global financial crisis, where there was a sharper increase in prices and therefore a sharper correction following the crisis, said analysts.

Giving a breakdown by region, the URA said that prices of non-landed properties in the prime or core central region fell 3.8 per cent in the third quarter, compared with the 2.7 per cent rise in the previous quarter. This was possibly due to a more flexible pricing strategy by developers to attract buyers to units of a higher quantum, CBRE’s head of research for South-east Asia, Desmond Sim said.

Prices of non-landed properties in the city fringe or rest of central region jumped 2.5 per cent, compared with the 1.7 per cent fall in the previous quarter.

Prices in the suburbs or outside central region jumped 1.7 per cent, compared with the 0.1 per cent gain in the previous quarter.

The URA also said that prices of landed properties jumped 3.7 per cent in the third quarter this year, after remaining unchanged in the second quarter.

Unlike prices, rents of private residential properties continued to weaken in the third quarter. Rents dipped 0.5 per cent from the previous three months, easing from a drop of 1.2 per cent in the second quarter.

Just like in the second quarter, developers did not launch any EC units for sale in the third quarter, and sold 164 EC units in the quarter. In comparison, they sold 71 EC units in the previous quarter.

As at the end of the third quarter, there was a total supply of 50,369 uncompleted private residential units, excluding ECs, in the pipeline with planning approvals, compared with 49,090 units in the previous quarter.

Of this number, 26,483 units, or more than half, remained unsold as at the end of the third quarter, compared with the 27,977 units in the previous quarter.

After adding the supply of 4,104 EC units in the pipeline, there were 54,473 units in the pipeline with planning approvals. Of the EC units in the pipeline, 2,244 remained unsold.

In total, 28,727 units with planning approvals (including ECs) remained unsold, down from 29,876 units in the previous quarter.