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SINGAPORE – Singapore’s private home prices continued to surprise to the upside despite the pandemic-induced recession, rising 0.8 percent 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 the preliminary URA estimate released on October 1.
After a 1 percent drop in the first quarter of 2020, the first quarterly decline in a year, prices began trending up again with a 0.3 percent increase in the second quarter. With the rise in the third quarter, private home prices rose 0.1 percent in the first nine months of this year.
The price increase in the third quarter was driven by rented homes and an explosion of shopping in the city’s peripheries and suburbs after the two-month circuit breaker ended June 1, said Christine Sun, head of research. and OrangeTee & Tie consulting.
“Many long-term investors and wealthy buyers are on the lookout for properties as many are repositioning their wealth from riskier assets,” Sun said.
In the first nine months of this year, nearly 80 percent of new private homes sold were purchased by Singaporeans, representing the highest proportion since 2010, Ismail Gafoor, PropNex CEO, said, citing data from Realis.
Despite strong buying interest, Ismail believes that new home sales activity could moderate in the final quarter of 2020 due to the recent crackdown on the practice of some developers to reissue the buyer’s option to buy (OTP) repeatedly.
The number of foreigners buying nearly doubled to 225 in Q3 2020 from 119 in Q2 2020 despite travel restrictions, possibly due to more foreign companies establishing operations in Singapore and record low interest rates said Lee Sze Teck, research director at Huttons Asia.
In the third quarter, most of the foreign buyers were from China, with the rest from Malaysia, India, the United States and Indonesia, he said.
Separately on Friday, data showed that HDB’s resale market came to life in the third quarter, with a resale volume of 7,787 stories, the highest in ten years. Resale HDB flooring prices also increased, by 1.5% qoq, the fastest growth rate in the last eight years.
According to final URA data, the total number of residential transactions, excluding executive condominiums (EC), increased 164.5 percent from 2,664 units in the second quarter to 7,047 units in the third quarter, it said.
Developers sold 3,517 units (excluding ECs), up 105 percent from the 1,713 units purchased in the second quarter. They launched 3,791 units (excluding the EC), compared with 1,852 units in the previous quarter.
Ms Sun said, “Investor exuberance for real estate seemed to have spread from the primary market to the secondary market.”
The resale market posted a steeper quarter-on-quarter increase of 271.6 percent from 933 units to 3,467 units in the third quarter. Resale homes also accounted for a higher share of total sales, 49.2 percent, compared to 35 percent in the previous quarter, Sun said.
For the third quarter, landless property prices increased 0.1 percent from the previous three months, compared with a 0.4 percent increase in the prior 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 biomedicine, are maintained. Those who weren’t affected may still have the confidence to buy, they said.
Furthermore, in the years leading up to the pandemic, private home price increases have been somewhat marginal, due in large part to the large number of cooling measures. This is different from the years before the global financial crisis, where there was a more pronounced rise in prices and therefore a more pronounced correction after the crisis, analysts said.
Giving a breakdown by region, the URA said that non-real estate prices in the main central or central region fell 3.8 percent in the third quarter, compared with a 2.7 percent drop in the quarter. previous. This was possibly due to a looser pricing strategy on the part of developers to attract buyers to larger units, said CBRE’s head of research for Southeast Asia, Desmond Sim.
Non-real estate prices on the outskirts of the city or in the rest of the central region increased by 2.5%, compared with a 1.7% drop in the previous quarter.
Prices in the suburbs or outside the Midwest were up 1.7 percent, compared with a 0.1 percent increase in the previous quarter.
The URA also said that real estate prices rose 3.7 percent in the third quarter of this year, after remaining unchanged in the second quarter.
Unlike prices, rents for private residential properties continued to weaken in the third quarter. Rents fell 0.5 percent from the previous three months, easing a 1.2 percent drop in the second quarter.
As in the second quarter, developers did not release EC units for sale in the third quarter and sold 164 EC units in the quarter. By comparison, they sold 71 EC units in the prior quarter.
At the end of the third quarter, there was a total supply of 50,369 unfinished private residential units, excluding the EC, in process with planning approvals, compared to 49,090 units in the previous quarter.
Of this number, 26,483 units, or more than half, remained unsold at the end of the third quarter, compared with 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 were left unsold.
In total, 28,727 units with planning approvals (including CEs) remained unsold, down from 29,876 units in the prior quarter.
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