SINGAPORE - Despite the Covid-19 pandemic and a recession, prices of private homes in Singapore picked up in the third quarter as Singapore entered phase two of its reopening after a nearly two-month-long circuit breaker.
The overall price index for private residential properties rose by 0.8 per cent, faster than the 0.3 per cent rise in the second quarter, flash estimates from the Urban Redevelopment Authority (URA) on Thursday (Oct 1) showed.
It comes after private home prices dropped 1 per cent in the first quarter of 2020, their first quarterly decline in a year.
Year to date, private home prices edged up 0.1 per cent.
The latest property market snapshot comes after URA on Monday clamped down on the practice of some developers reissuing a buyer's option to purchase (OTP) multiple times.
The move is aimed at encouraging financial prudence amid Singapore's worst downturn and surge in job losses by making sure that buyers do not end up committing to new private homes they cannot afford.
Market experts said seemingly robust new private home sales in the past few months amid a severe recession may have given rise to a somewhat distorted perception of the market.
Under the new guidelines, developers can no longer reissue an OTP to the same buyer for the same unit for 12 months after the original OTP expires. It will weed out buyers who are less confident of committing to a purchase, analysts said.
Mr Wong Xian Yang, Cushman & Wakefield's associate director of research for Singapore and South-east Asia, said the private home market "remained surprisingly resilient", with Q3 prices at the highest since the same period in 2013.
He said this reflected strong underlying demand for private homes and strong holding power due to unprecedented government stimulus supporting the economy, which has mitigated distress sales and allowed sellers to hold on to their selling prices.
However, with economic uncertainty ahead and as pent-up demand from the circuit breaker period is slowly absorbed, Mr Wong sees demand falling in the fourth quarter of this year.
Additionally, the new curbs on the reissuance of OTPs will cause a slight pull-back in market activities as buyers adopt a more cautious stance, he added.
"For the whole of 2020, we expect prices to remain flat and fluctuate around a narrow band at around -1 per cent to 1 per cent, given on-going market momentum and market headwinds," he said.
Ms Christine Sun, head of research and consultancy at OrangeTee & Tie, said waves of quantitative easing (QE) by central banks around the world to stimulate their economies may also have the effect of pushing up asset values and property prices as new money filtering through the economies can increase the investment capital for properties.
"Investors' confidence was also boosted by an increase in foreign direct investment, especially from healthcare firms and tech giants," she said.
URA data also showed prices of private homes in the city fringes or rest of central region rose 3.3 per cent in Q3, compared to the 1.7 per cent drop in the previous quarter, while prices in the outside central region gained 1.7 per cent, compared to the 0.1 per cent increase in the previous quarter.
Only prices of non-landed private homes in the prime areas or core central region declined in the third quarter, falling 4.9 per cent compared to the 2.7 per cent increase in the previous quarter.
URA's flash estimates are compiled based on transaction prices given in contracts submitted for stamp duty payment and data on units sold by developers up till mid-September.
The data will be updated on Oct 23, when URA releases its full set of real estate statistics for third quarter.