SINGAPORE - Private home prices have bounced back in the second quarter of the year as buyers show strong demand for new launches.
This comes after a price growth slowdown in the first quarter, which some analysts said was a knee-jerk reaction to the latest round of property curbs introduced in December last year.
Overall, private home prices rose by 3.2 per cent in the second quarter, fuelled mainly by the non-landed private home segment, which grew by 3.3 per cent, according to flash estimates from the Urban Redevelopment Authority on Friday (July 1).
Analysts said the pick-up in price growth was driven largely by strong buying demand for new condominium launches that were sold at higher benchmark prices, after a lull period in the first quarter of this year.
Compared with the mere 0.7 per cent price growth in the first quarter, the price index has returned to a similar range as seen before the property cooling measures kicked in last December, said ERA Realty head of research and consultancy Nicholas Mak.
PropNex Realty chief executive Ismail Gafoor said the price growth was surprising given the many uncertainties in the current market, such as rising interest rates, inflation, and the stock market turmoil.
"This perhaps speaks of the resilience of the housing demand, largely underpinned by Singaporean buyers," he added.
Price growth for non-landed private homes was driven mainly by new launches in the city fringe, or the rest of central region, where home values rebounded by 6 per cent in the second quarter, reversing the fall of 2.7 per cent in the first quarter.
Mr Gafoor noted that both projects clocked robust sales with average prices at $2,182 per sq ft at Piccadilly Grand and $2,409 per sq ft at Liv @ MB.
Ms Tricia Song, head of research for South-east Asia at CBRE, noted that both projects set new benchmark prices as developers held firm on their asking prices amid higher construction costs and low unsold inventory.
"The strong showing at the two projects might be indicative that investment and genuine demand and liquidity for well-located projects are still relatively strong despite recent cooling measures and global economic headwinds," said Ms Song.
"Some buyers could also be locking in mortgage rates ahead of anticipated further interest rate hikes, especially since selling prices at future launches are likely to remain elevated with land prices staying firm," she added.
Some analysts said that in the longer term, rising mortgage loans could put a drag on home sales, with price growth expected to slow down in the second half of the year as buyers are more cautious with their purchases.
Mr Leonard Tay, head of research at Knight Frank Singapore, said: "Price increases could taper in the coming months as rising interest rates will be a natural cooling measure in the second half of this year, reining in home buyers' purchasing power."
However, analysts expect healthy buying interest for upcoming launches in the third quarter, such as AMO Residence in Ang Mo Kio and Lentor Modern in Yio Chu Kang.
CBRE's Ms Song said: "Sales volume could pick up next quarter for these mass-market projects as we expect to see steady interest from upgraders and first-time home buyers who are largely unaffected by the recent round of cooling measures."