Singapore Home Prices March On In Q2 2022, Reflecting Healthy End-user Demand

SINGAPORE, 22 July 2022 – Home prices continued to climb in Q2 2022 as healthy housing demand amid tight supply contributed to the price growth in the private residential property market and the HDB resale segment. Figures from the Urban Redevelopment Authority (URA) and the Housing and Development Board (HDB) showed that prices have risen at a faster pace in Q2 2022 compared to the previous quarter.

Q2 2022 URA Private Residential Property Index

Overall private home prices increased by 3.5% QOQ in Q2 2022, accelerating from the 0.7% growth in Q1 2022. The final print released today was higher than the 3.2% flash estimate published on 1 July. In the first half of 2022, private home prices have climbed by 4.2% from the end of 2021. PropNex has upgraded its forecast and now expects a price growth of 7% to 8% for the full-year 2022.

The price increase in Q2 2022 was led by the Non-landed private home segment, where home values rose by 3.6%, overturning the 0.3% decline in Q1 2022. Over in the Landed homes segment, the price growth slowed from 4.2% QOQ in Q1 to 2.9% QOQ in Q2 2022, as sales momentum of landed properties let up during the quarter.

Within the non-landed homes segment, the Rest of Central Region (RCR) led the charge with a 6.4% QOQ price increase, as new launches Piccadilly Grand and Liv@MB drove up RCR values. Based on URA Realis caveat data, Piccadilly Grand sold 324 units at a median price of $2,175 psf in Q2, while Liv@MB shifted 231 units at a median price of $2,408 psf during the quarter. These two projects boosted RCR new home sales to 1,309 units, up from 856 in Q1 2022. Meanwhile, 1,239 resale properties in RCR were sold in Q2 2022.

In the Outside Central Region (OCR), non-landed home prices rose by 2.1% QOQ in Q2 2022, slowing marginally from the 2.2% QOQ growth in the previous quarter. Firm pricing from a lack of unsold stock in the primary market and a pick-up in resales likely helped to support price growth in the OCR. Developers sold 496 new OCR private homes (ex. ECs) in Q2 2022 amid limited supply of new units – this is the lowest quarterly new sales in the OCR since 196 units changed hands in Q4 2008. Meanwhile, 2,257 units were transacted in the resale market, accounting for a substantial 79.4% of total sales in OCR – a possible indication of the supply crunch situation in the OCR new launch market as buyers turned to resale properties.

Non-landed private home prices in the Core Central Region (CCR) moved up by 1.9% QOQ in Q2 2022, reversing the 0.1% QOQ decline in the previous quarter. The price increase was supported by higher transactions in both the new sale and resale market, as more buyers find value in CCR projects amid rising prices of city fringe homes. There were 592 new private homes sold in the CCR – up from 361 units sold in Q1 2022 - and is the highest quarterly CCR sales since Q2 2021. Resales also came in higher from Q1 to Q2, rising by 38.8% QOQ to 740units.

All in, developers launched 1,956 new units (ex. ECs) and sold 2,397 new private homes (ex. ECs) in Q2 2022. In the first half of 2022, new private home sales totalled 4,222 units (ex. ECs). In the EC market, 193 new units were transacted in Q2 2022 – up from 131 units in the previous quarter – as the launch of North Gaia EC in April helped to lift sales. Meanwhile, overall private resale transactions rose to 4,236 units in Q2 2022 from 3,377 in the previous quarter. Sub-sale transactions also rose to 178 transactions in Q2 2022 from the 141 units in Q1 2022.

Ismail Gafoor, CEO of PropNex Realty:

“The successful launch of Piccadilly Grand and Liv@MB helped to rev up the new home sales market in Q2 2022, which was relatively lacklustre in Q1 due to the lack of launches and weaker sentiment right after the introduction of new cooling measures in December 2021. The slower price growth in Q1 2022 also proved to be short-lived as a rebound in transactions propped up home values in Q2 2022.

We expect private home prices to continue to increase gradually for the rest of the year, with upcoming launches stimulating price growth. In addition, the firm land prices, rising construction costs, and healthy homebuyer demand will also exert some upward pressure on home values. As at end of Q2 2022, there were 15,805 unsold new private homes (ex. ECs), up from the 14,087 unsold units as of end of Q1 2022. Of the 15,805 unsold units, 6,036 units are in the CCR, 5,383 units in the RCR and just 4,386 units in the OCR. In the recent months, the absence of major OCR launches has created a pent-up demand for such homes and we expect this to translate to relatively strong sales for mass market launches in the pipeline, kicking off with the launch of AMO Residence in Ang Mo Kio this weekend (23 July).

In Q2 2022, resale properties accounted for 62.2% of the overall home sales. This is a substantial proportion which perhaps reflects not only the limited options in the new launch market but also the preference for move-in-ready resale units among some buyers. Furthermore, the faster pace of price increase in the primary market may also channel some buyers to the resale market, where prices are rising at a slower clip. Resale prices should continue to tick up owing to tight resale stock – as some owners may prefer to hold on to their investment property for rental income amid the hot leasing market, which saw overall private rentals climb by 6.7% QOQ in Q2 2022.

While the further increase in interest rates may test the affordability threshold of some would-be buyers with tight housing budget, and potentially take some of them out of the market, we are still relatively optimistic about private home sales this year, in view of the low inventory and resilient demand from Singaporeans and foreigners as well, given the reopening of borders.”

Q2 2022 HDB Resale Price Index

Figures released by the Housing and Development Board (HDB) showed that resale flat prices rose by 2.8% QOQ in Q2 2022 – building on the 2.4% growth in Q1 2022. The final figures released today was also higher than the 2.6% flash estimate released on 1 July. In the first half of 2022, HDB resale prices have increased by 5.3% from the end of 2021. PropNex projects that resale flat prices could rise by between 7% and 9% for the whole of 2022. According to the HDB, 6,819 HDB resale flats were transacted in Q2 2022 – 1.7% lower than the 6,934 flats sold in the previous quarter.

Wong Siew Ying, Head of Research and Content, PropNex Realty:
“The HDB resale market is on track to achieve another year of healthy price growth. Feedback suggests that the tight resale flat supply is helping to prop up prices amid steady demand from various groups of buyers. They include first-time homebuyers who prefer ready-built flats, buyers who have been priced out of the private residential market, upgraders in search of a larger flat, as well as those who have sold their private home and are looking to purchase an HDB flat on the secondary market. With interest rates set to rise further, some buyers may decide to play it safe and opt to purchase a resale flat, which is generally more affordable compared to a private condo.

Meanwhile, on the supply side, despite the firmer resale prices, some flat owners may be less inclined to sell as they perceive that the cost of buying a replacement home of a similar size would be high in the current market. This ongoing demand and supply dynamics is expected to continue to be supportive of HDB resale prices over the next couple of quarters.

Transaction data showed that non-mature towns Sengkang, Punggol, Yishun, Woodlands and Jurong West were the most popular estates in Q2 2022, accounting for over one-third of the quarter’s transactions including a number of flats that have recently achieved the minimum occupation period among the resale transactions.

Based on HDB resale transaction data, the median prices of 3-room, 4-room and 5-room resale flats ranged from $368,000 to $610,000 in Q2 2022 – up by 1.7% to 3.0% from the median resale prices in Q1 2022 ($358,000 - $600,000). With more newly MOP flats expected to hit the resale market in the coming months, we expect that median prices will remain firm.”