The return to Phase 2 (Heightened Alert) has led to developers postponing some launches – which might impact new home sale numbers in July and August
Private residential property prices in Q2 2021 in Singapore continued to grow, albeit at a slower pace. Final statistics from the Urban Redevelopment Authority (URA) on Friday (23 July) showed that the private residential property prices grew by 0.8% quarter-on-quarter (QOQ) in Q2 2021, after rising 3.3% QOQ in Q1 2021. This final figure is slightly below the 0.9% flash estimate increased announced on 1 July.
On a year-on-year (YOY) basis, private residential property prices have grown 7.1%. The private residential property prices have increased by 4.1% since Q4 2020.
In addition, in Q2 2021, developers sold 2,966 private residential units (excluding ECs), 15% QOQ lower than the previous quarter of 3,493 units. However, this is 27.2% higher on a YOY basis, largely due to the lower volume sold during the circuit breaker period that took place in 2020. The CCR or high-end segment attributed to 43.3% to the sold units in Q2 2021, reflecting strong investor sentiment in Singapore as a safe haven.
While the property prices grew slower this quarter, prices could increase in the near term as supply lags demand recovery due to possible delay in completion of new projects. Strong investors’ confidence coupled with optimism in business conditions and ongoing vaccination roll-out could boost the demand for private homes.
As the government continues to remain vigilant and monitor the property market closely, additional cooling measures on the demand side could be premature, given a recovering economy and that the year-on-year private home price increases are still in the single digits.
Colliers International commenting on the new home sale numbers said it does not rule out more curbs should prices outpace economic fundamentals, resulting in signs of overheating of the market.
“We expect private home prices to rise 6% in 2021, tracking GDP growth.”
Private residential property prices grew at a slower rate, after strong growth for the past 2 quarters. In addition, sentiments among buyers and developers were observed to be more cautious in the latter half of Q2 2021 due to the resurgence of COVID-19 cases.
Based on URA data, the growth in private residential property prices moderated to 0.8% q-o-q in Q2 2021, from 3.3% q-o-q in Q1 2021. This final figure is slightly lower than the 0.9% flash estimate increase on 1 July. This brings prices to be up 4.1% year-to-date, +7.1% y-o-y and +7.5% from its Q1 2020 recent trough.
The landed segment saw a slight decline of 0.3% q-o-q, whereas the non-landed segments saw an increase of 1.1% q-o-q. Within the non-landed, the price increase was led by the OCR (1.9% q-o-q), followed by the CCR (1.1% q-o-q) and RCR (0.1% q-o-q).
A total of 2,966 private residential new homes (excluding ECs) were sold in Q2 2021. This number is 15.1% lower than the 3,493 units sold in Q1 2021 due to the fewer new launches during the quarter amid tighter measures. However, it was 73.1% higher y-o-y on a low base as Q2 2020 included two months of “circuit breaker”.
This brings total take-up of new home sales to 6,459 units in H1 2021, which was 67.2% higher y-o-y. During Q2 2021, sales were distributed across all locations, attracting both investors and owner occupiers. For instance, Irwell Hill Residences (332 units), Normanton Park (193 units) and One-north Eden (155 units) were well-received and were the best-selling projects for the quarter.
Robust activity was observed in the resale market, buoyed by the slower pace of new launches, and as constructions for new projects are delayed. Resale transactions made up 63.1% of total transactions in Q2 2021, compared to the typical 50% average. 5,333 units were transacted in the resale market in Q2 2021, surpassing Q1 2021’s performance of 4,519 units.
With take-up exceeding the number of units launched, unsold inventory continued to ease to 19,384 units, the lowest number since Q4 2017. On the back of positive market conditions, it is likely that upcoming tenders of GLS sites will continue to see strong interest, while sites from the private market will also be attractive to developers looking for redevelopment sites.
Ms Tricia Song, CBRE’s Head of Research, Southeast Asia, said: “On one hand, the moderation in price increase has reduced the risks of more cooling measures; on the other, the return to Phase 2 (Heightened Alert) has led to developers postponing some launches, which might impact new home sale numbers in July and August.”
“Nonetheless, CBRE Research expects new home sales figures for 2021 to still exceed 2020’s figure of 9,982 units at 10,000 to 11,000 units; with demand supported by upcoming mass market launches, as well as strong HDB resale prices which will provide a steady pool of upgraders. Separately, HDB reported that the HDB resale price index grew 3.0% q-o-q and 11.0% y-o-y in Q2 2021.
With prices up 4.1% year-to-date, CBRE Research expects private home prices to rise by 6 – 8% for the full year, barring any unforeseen circumstances.”
Ms Song
Ms Shirley Wong, Senior Associate Director of Research for Singapore at Colliers International, said: “Macroeconomic conditions continued to improve in Q2 2021. Based on advance estimates from the Ministry of Trade and Industry (MTI), Singapore’s economy grew 14.3% YOY in Q2 2021, largely due to a low base during the same period in 2020.”
“MTI’s projection of Singapore GDP’s growth remains at 4%-6% in 2021. And as of 23 July 2021, Oxford Economics is projecting Singapore’s economy at a growth rate of 6.4% YOY in 2021.
Buyer demand is expected to remain strong in the well-priced city fringe and suburban projects, with a sweet spot of SGD1 to 1.5 million per unit, which is well-supported by the strong HDB resale market, which has seen prices grow a further 3.0% in Q2 2021.
As the government continues to remain vigilant and monitor the property market closely, additional cooling measures on the demand side could be premature, given a recovering economy and that the year-on-year private home price increases are still in the single digits.
However, we do not rule out more curbs should prices outpace economic fundamentals, resulting in signs of overheating of the market. We expect private home prices to rise 6% in 2021, tracking GDP growth.”
Ms Wong
Mr Paul Ho, chief officer at iCompareLoan, said: “Although new home sale numbers are lower this quarter. This is because prices could increase in the near term.”
Colliers International also noted that supply lags demand recovery due to possible delay in completion of new projects could lead to price increases. Strong investors’ confidence coupled with optimism in business conditions and ongoing vaccination roll-out could boost the demand for private homes.
As the government continues to remain vigilant and monitor the property market closely, additional cooling measures on the demand side could be premature, given a recovering economy and that the year-on-year private home price increases are still in the single digits.
Developers launched 2,356 uncompleted private residential units (excluding ECs) for sale in Q2 2021, less than the 3,716 launched units in the previous quarter. A total of 6,072 units were launched in H1 2021, a 53.9% increase from the same period in 2020.
Developers sold 2,966 private residential units (excluding ECs) in Q2 2021, 15% lower than the 3,493 units sold in the previous quarter. For H1 2021, developers have sold a total of 6,459 units, 67.2% higher than the same period in 2020.
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