SINGAPORE, 03 October 2022 – Home prices in Singapore kept up the growth momentum in Q3 2022, driven by robust home sales in the private and public housing market. Flash estimates released by the Urban Redevelopment Authority (URA) and the Housing and Development Board (HDB) showed a meaningful increase in both private home prices as well as HDB resale prices - a factor which likely contributed to the rolling out of more cooling measures on 30 September 2022. Home prices in Singapore have largely maintained an upward trajectory throughout the Covid-19 pandemic and remained firm amid the recent increase in interest rates.
Q3 2022 Private Residential Property Index (Flash Estimates)
The flash estimates from the Urban Redevelopment Authority (URA) showed that overall private home prices rose for the 10th straight quarter in Q3 2022, climbing up by 3.4% QOQ – following a 3.5% growth in the previous quarter. Taking in the flash estimates, private home prices have now risen by 7.8% from end-2021. The flash estimates have been compiled based on transactions up till mid-September. The final print will be released on 28 October.
The non-landed private homes segment led growth in Q3 2022 where prices rose by 4.1% QOQ. Fresh mass market condo launches (AMO Residence in July, and Sky Eden@Bedok and Lentor Modern in September) which had achieved robust sales at new benchmark prices during the quarter have spurred non-landed home prices, particularly in the suburban areas.
- Core Central Region (CCR) – The price growth of non-landed private homes in the CCR quickened, rising by 2.3% QOQ in Q3 2022 compared to the 1.9% QOQ growth in Q2 2022. This came as some projects such as Hyll On Holland, Perfect Ten and Leedon Green moving more units at a higher average price during the quarter. With home prices rising at a faster pace in the other sub-markets, some buyers are finding value in the CCR market, particularly for freehold properties. Based on URA Realis caveat data, developers sold 539 new CCR non-landed private homes in the 1 July to 25 September period. Similarly, 539 CCR homes were transacted on the resale market.
- Rest of Central Region (RCR) – RCR non-landed home prices grew at a slower pace in Q3 2022 at 2.5% QOQ compared to the 6.4% increase in the previous quarter, where new projects LIV@MB and Piccadilly Grand helped to lift prices. Given the lack of new launches in Q3, buyers turned to previously launched projects, including Riviere and One Pearl Bank which were the top-selling RCR projects in Q3 2022, transacting 68 units and 37 units respectively. Developers sold 366 new RCR homes, while 772 resale non-landed properties changed hands during the quarter (till 25 Sep).
- Outside Central Region (OCR) – The mass market homes segment saw a whooping QOQ price growth of 7.0% in Q3 2022 as new launches strengthened prices. Three new OCR projects hit the market during the quarter and all of them were well-received by buyers – AMO Residence has now sold about 98% of its total units, while Sky Eden@Bedok and Lentor Modern transacted nearly 77% and 85% of the units available respectively (as of 25 Sep). All three launches achieved an average price of slightly more than $2,100 psf and were the best-selling projects overall in Q3 2022. According to transaction data, developers sold 1,238 new OCR units in Q3 (till 25 Sep) while 1,340 non-landed homes were sold on the resale market.
Meanwhile, landed home prices climbed by 1.2% QOQ in Q3 2022, as per the flash estimates, slowing down from the 2.9% and 4.2% QOQ growth in Q2 and Q1, respectively. The price increase appears to be broad-based, with median transacted unit prices rising across all landed homes categories (Detached, Semi-detached, and Terrace) from Q2 to Q3, based on URA Realis caveat data.
Ismail Gafoor, CEO of PropNex Realty:
“Healthy housing demand, low interest rates, and pandemic recovery supported by strong fiscal measures have all helped to feed into higher home prices in the past year or so. With interest rates set to rise further and the prospects of slower economic growth looming, we think the latest cooling measures will help to instil more caution and prudence into the property market.
The 4% medium-term interest rate for TDSR will lead to a reduction in eligible loan quantum, but we do not expect this to have a severe impact on private home sales as the magnitude of increase is fairly modest, at 0.5%-pt. Based on our observations from recent OCR launches, the demand far outstrips the number of available units; therefore, should some would-be buyers decide to drop out due to the fresh measures, there are other interested buyers to take their place. In addition, many buyers are cognisant of the rising interest rates and banks have also been applying higher mortgage rates, so we think the market has been adjusting to this in recent months.
We believe the cooling measures will ensure that private home prices remain stable, acting as speed bumps to put the brakes on the pace of growth we have seen so far. However, we are not anticipating a sharp downward correction in prices as developers do not have that much room to reduce price, in view of the higher construction cost, the high land cost for some sites and also seeing that many of them have relatively low unsold inventory.
Generally, we observe that the demand for homes remains resilient. Looking ahead, the factors that will support housing demand include the recovery in foreign employment levels as more expatriates return to Singapore after the easing of travel restrictions, the welcoming of new citizens and permanent residents, as well as family formation.
For the whole of 2022, we are projecting an 8% to 9% growth in overall private home prices, as the limited inventory of unsold new private homes (particularly in the RCR and OCR), limited launches, and tighter resale stock may help to support prices. We estimate that about 8,000 to 8,500 new private homes (ex. Executive condos) could be sold this year – normalising from the over 13,000 new units shifted in 2021.”
Q3 2022 HDB Resale Price Index (Flash Estimates)
The flash estimates released by the Housing and Development Board (HDB) showed that resale prices of public housing flats rose by 2.4% QOQ in Q3 2022 – easing slightly from the 2.8% increase in Q2 2022. Taking in the flash estimates, HDB resale prices have now risen by about 7.8% from end-2021. Based on transaction data, 7,270 HDB resale flats have been sold in Q3 2022 (till 30 Sep) – up by 6.6% from the 6,819 flats resold in the previous quarter.
Wong Siew Ying, Head of Research and Content, PropNex Realty:
“HDB resale prices continued to climb unabated in Q3 2022. Looking at resale transaction data, the price growth was observed in both the mature and non-mature HDB towns. Prices of resale HDB flats have remained very resilient, riding out the Covid-19 pandemic and macro uncertainties. Factoring in the Q3 flash estimates, HDB resale prices have grown by 27.6% since the start of the pandemic in 2020 Q1.
Despite the uncertain global outlook as rate hikes raise the spectre of potential recession in advanced economies, sentiment in the HDB resale market remained lively in Q3. In particular, 111 HDB resale flats were transacted for at least $1 million in Q3 2022 – a record for such sales in a quarter. The new 15-month wait-out period introduced as part of the latest cooling measures will moderate demand for larger flats, especially those in prime locations. Meanwhile, the tighter LTV limit of 80% and a 3% medium-term interest rate floor will restrict the loan quantum for those taking a housing loan from the HDB.
We anticipate that there may be a period of impasse where would-be buyers are waiting for prices to fall while sellers look to hold on to their asking price. This may play out and cause resale volume to moderate slightly perhaps in the next 2 to 3 months, before the market adjusts and finds an equilibrium. Supported by strong underlying demand, we do not expect HDB resale prices to decline significantly; the cooling measures will ensure a more sustainable pace of price growth.
For the full-year 2022, we forecast that overall HDB resale prices could rise by 9% to 10% - slowing from the 12.7% growth in 2021. In terms of resale volume, we project that 27,000 to 28,000 flats may be resold this year.”
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