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SINGAPORE – Despite the Covid-19 pandemic and recession, private home prices in Singapore rebounded in the third quarter as Singapore entered phase two of its reopening after a nearly two-month circuit breaker of duration.
The overall private residential property price index rose 0.8 percent, faster than the 0.3 percent rise in the first quarter, flash estimates from the Urban Redevelopment Authority (URA) showed on Thursday ( October 1st).
It comes after private home prices fell 1% in the first quarter of 2020, their first quarterly decline in a year.
So far this year, private home prices have risen 0.1 percent.
The latest snapshot of the housing market comes after the URA on Monday cracked down on the practice of some developers of reissuing the buyer’s call option (OTP) multiple times.
The move is aimed at fostering financial prudence amid Singapore’s worst recession and rising job losses, ensuring buyers don’t end up compromising on new private homes they can’t afford.
Market experts said that seemingly strong new home sales in recent months amid a severe recession may have led 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 eliminate buyers who are less confident in committing to a purchase, analysts said.
Wong Xian Yang, Cushman & Wakefield’s associate director of research for Singapore and Southeast Asia, said the private housing market “remained surprisingly resilient,” with third-quarter prices at the highest level since the same period in 2013. .
Wong said this reflected strong underlying demand for private homes and strong holding power due to unprecedented government stimulus supporting the economy, which has mitigated emergency sales and allowed sellers to maintain their sales prices.
However, with economic uncertainty ahead and as the stifled demand from the breaker period slowly absorbs, Wang expects demand to decline in the fourth quarter of this year.
Furthermore, the new restrictions on OTP reissue will cause a slight setback in market activities as buyers take a more cautious stance, he added.
For all of 2020, we expect prices to remain stable and fluctuate in a narrow band of around -1% to 1%, given ongoing market momentum and market headwinds, he said.
URA data also showed that private home prices on the city’s peripheries or the rest of the central region increased 3.3% in the third quarter, compared to a 1.7% drop in the previous quarter, while prices in the outer central region increased 1.7% to 0.1% increase from the previous quarter.
Only non-real estate private home prices in major areas or the mid-central region declined in the third quarter, falling 4.9 percent compared to a 2.7 percent increase in the prior quarter.
URA advance estimates are compiled based on transaction prices given in contracts submitted for payment of stamp duty and data on units sold by developers through mid-September.
The data will be updated on October 23, when the URA releases its full set of real estate statistics for the third quarter.
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