July 23, 2021
23 July 2021, SINGAPORE – Home prices continued to climb in Q2 2021, amid the tighter COVID-19 safe management measures under the Phase 2 Heightened Alert (P2HA) in May and June. While the restrictions have had some impact on property viewings and the launch of new projects for sale during the quarter, transaction volumes remained relatively healthy in Q2 2021 and PropNex expects home sales across all segments – private new home sales, private resale, and HDB resale – to outperform 2020’s volumes.
Data from the Urban Redevelopment Authority (URA) showed that overall private home prices rose for the fifth consecutive quarter in Q2 2021, rising by 0.8% QOQ – moderating from the 3.3% growth in Q1 2021. On a year-on-year basis, the overall home prices grew by 7.1% in Q2 2021.
In the first half 2021, overall private home prices have risen by 4.1%. For the full year 2021, PropNex projects that private home prices could rise by 6% to 7%, supported by primary market sales as several new projects are slated to be launched.
The non-landed private homes segment led the price growth in Q2 2021, with values rising by 1.1% from the previous quarter. In particular, the Outside Central Region (OCR) achieved the sharpest increase during the quarter as prices rose by 1.9% QoQ. This is followed by the Core Central Region (CCR) and the Rest of Central Region (RCR) which posted price growths of 1.1% and 0.1% respectively. Meanwhile, landed home prices slipped by 0.3% QOQ, easing from a strong growth of 6.7% in the previous quarter.
In terms of transaction volumes, 2,966 new homes (excluding ECs) were sold in Q2 2021 - down by 15.1% from Q1 2021, but up strongly from the 1,713 new homes sold in Q2 2020, where market activities were severely disrupted by the circuit breaker. The resale segment did particularly well in Q2 2021, with 5,333 units changing hands – this is the highest quarterly resale figure since 5,809 resale homes were sold in Q3 2009. Meanwhile, 495 new ECs were transacted in Q2 2021, compared with 647 units in the previous quarter.
Developers launched fewer new homes for sale in Q2 2021 at 2,356 units (ex. ECs) - 36.6% lower than the 3,716 units put on the market in Q1 2021. For ECs, 413 units were launched for sale in Q2 2021, representing a drop of 41% QoQ.
Ismail Gafoor, CEO of PropNex:
“The private residential market remained resilient in Q2 2021 despite the tightening of pandemic measures in May and June 2021. Our observations suggest that buyers’ confidence remains generally intact, buoyed by the economic recovery and the more positive outlook ahead for the Singapore economy.
As Singapore re-enters the Phase 2 Heightened Alert (P2HA) from 22 July to 18 August, some launches that were initially planned for July – such as The Watergardens at Canberra and Parc Greenwich EC have been deferred. The current pandemic situation and the re-introduction of P2HA may pose some uncertainty for developers in terms of launch activities over the next month or so, but we do not expect it to put a dent on home demand nor impact prices significantly.
Looking at the relatively strong sales in 1H 2021 – new home sales at 64.5% and resale at 91.8% of 2020’s total volumes – we remain optimistic that transactions this year will surpass the figures garnered in 2020. We are projecting new home sales to likely come in at 11,000 to 12,000 (ex. ECs) units, representing a 10% to 20% increase from 9,982 units last year; in the resale market, we forecast over 16,000 homes may be resold in 2021 – up from 10,729 resale properties transacted in 2020, barring any unforeseen events.
The healthy demand for homes will help to support prices, amid the gradual economic recovery and still positive market sentiment. For the full-year 2021, we project that overall private home prices may rise by 6% to 7%. In addition, the dwindling unsold stock – at 19,834 units as at the end of Q2 2021 – may also keep prices stable given the limited supply.
Based on the caveats lodged, Singaporeans continue to account for the majority of new non-landed private home sales in Q2 2021, making up about 81.9% of the total new sales in the quarter – down slightly from the 82.9% in Q1 2021. Meanwhile, the proportion of new non-landed private homes purchased by foreigners inched up to 4.9% in Q2 2021 from 4.2% in the previous quarter. The slight increase in foreign demand could be due to the several new launches in the Central Region in Q2.”
Data released by the Housing and Development Board (HDB) showed that resale prices of public housing flats rose by 3% QOQ in Q2 2021, following the 3% QoQ increase in the previous quarter. On a YoY basis, HDB resale values rose by 11% in Q2 2021.
With an index reading of 146.4 in Q2 2021, the HDB resale price index is now 2% below the recent peak in Q2 2013.
Wong Siew Ying, Head of Research and Content, PropNex:
“Figures from the HDB indicated that 7,063 resale flats were transacted in Q2 2021, representing a 6.8% drop from 7,581 units in the previous quarter. The decline in QoQ sales volume was not unexpected as the P2HA period in the quarter likely restricted home viewings. Nevertheless, the HDB resale volume achieved in Q2 2021 is still a very credible performance, coming in higher than many of the pre-pandemic quarterly sales numbers.
The catalysts that drove the public housing resale volume in Q2 2021 are largely the same demand drivers that we have observed previously, and they included factors such as the delay in the completion of new BTO flats, improved consumer confidence, and more optimistic economic outlook. In addition, with HDB resale prices on the up-trend recently, some buyers may decide to enter the market sooner rather than risk higher prices down the road. Transaction data suggest a fairly broad-based increase in prices as most HDB towns posted average resale price growths from Q1 to Q2 2021.
With the re-introduction of P2HA from 22 July to 18 August, we expect that HDB resale volume for Q3 2021 could likely remain stable at around the level seen in Q2 2021. For 1H 2021, 14,644 resale flats were transacted and we anticipate that sales could exceed 26,000 flats for the entire 2021 - up from 24,748 flats resold in 2020. In 1H 2021, HDB resale prices have climbed by 6% and we expect HDB resale values to increase by 10% to 11% for the whole of 2021.”
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