journo
31-10-22, 10:45
Private home prices rose 3.8% in the third quarter, but price growth is expected to slow due to headwinds and cooling measures
Oct 31, 2022
Private home prices may grow more slowly in Q4 after rising 3.8% in Q3 due to economic headwinds, the latest round of property cooling measures, and the year-end seasonal lull.
The increase in Q3, the tenth consecutive quarter of rising prices, accelerated from 3.5 percent in Q2 and was higher than the 3.4 percent flash estimate released earlier this month by the Urban Redevelopment Authority (URA).
Lee Sze Teck, senior director (research) at Huttons, predicts that private home prices will rise by 1 to 2% in Q4, but that full-year price growth will be between 9 and 10%. Private home prices increased by 8.2 percent in the first three quarters of the year.
According to Tricia Song, CBRE's head of research (South-east Asia), "the new measures could engineer a soft landing, with new private home sales growth and price growth to cool in the next six to 12 months." The government enacted new property cooling measures in late September to curb demand and ensure prudent borrowing. Song, on the other hand, does not anticipate a crash, citing healthy household balance sheets, limited unsold inventory, and a supportive rental market as reasons.
Wong Xian Yang, head of research at Cushman & Wakefield, predicts a slowing of price growth but believes developers are unlikely to lower prices at new launches. "Unsold inventory remains low, while land acquisition and construction costs remain high," he said. In light of potentially lower demand due to higher interest rates and an economic slowdown, developers are likely to slow their launch progress and re-calibrate their marketing strategies."
He predicts that private home prices will rise by 8 to 9% this year, then fall by 3 to 4% the following year.
The increase in private home prices in Q3 was led by non-landed home prices, which increased by 4.4% after increasing by 3.6% the previous quarter.
Non-landed home prices in the outside central region (OCR) increased the most - by 7.5% - thanks to major launches AMO Residence, Lentor Modern, and Sky Eden@Bedok; these developments saw brisk sales even at benchmark prices. As a result of demand from HDB upgraders, the median price of units sold at those projects in Q3 was all above S$2,100 per square foot (psf).
In comparison, non-landed home prices in the OCR increased by 2.1% in Q2.
Prices of non-landed homes increased by 2.3 percent in Q3, compared to 1.9 percent in Q2; prices increased by 2.8 percent in the rest of the central region (RCR), slowing from 6.4 percent in the previous quarter.
Lee noted that as the price gap between the CCR and RCR narrows, more buyers are flocking to the CCR. "As of Q3 2022, the estimated median (price) psf of new homes in the RCR was S$2,431, which was 13.5% lower than the CCR's median (price) psf." "Despite launching only 240 units for sale, developers sold 562 units in the CCR in Q3," he said.
Ismail Gafoor, CEO of PropNex Realty, stated that despite the strong Singapore dollar and persistent inflation, foreign buyers continue to look to residential property in Singapore as a means of wealth preservation. According to data from the URA's Realis platform, foreign buyers accounted for about 12% of non-landed new home sales in the CCR and RCR in Q3, up from 9% in Q2 and 6% in Q1.
Meanwhile, landed property prices increased by 1.6% in Q3, compared to 2.9% growth in the previous quarter.
https://i.imgur.com/lZlKpm5.png
Sales volumes in both the new and resale markets fell in the face of rising interest rates and higher prices. Analysts expect new sales volumes to fall in Q4 due to the upcoming seasonal lull, particularly as buyers and developers consider the latest cooling measures. According to CBRE Research, new home sales in 2022 will be around 8,000 units, down 39% year on year, and resale volumes will be around 14,000 units, down 40 to 45 percent year on year.
In the third quarter, resale transactions accounted for 60.5 percent of all private home sales. They totaled 3,719 units, down from 4,236 in the previous quarter.
In the third quarter, developers sold 2,187 private homes (excluding executive condominiums or ECs), with new sales volumes falling 8.8 percent quarter on quarter. They also put 1,455 units on the market, down from 1,956 in the previous quarter. Despite the fact that no EC units were released for sale during the quarter, developers sold 28 EC units.
Ong Teck Hui, JLL's senior director of research and consultancy, stated that unsold inventory remained low at 15,777 units as of the end of Q3 2022, which is less than half of the 37,799 units recorded during the previous pre-pandemic peak in Q1 2019. 15,677 of the 15,777 units were left unfinished.
"The market remains undersupplied, which has resulted in sustained price increases," he said.
Developers are also being more cautious when it comes to purchasing properties. While recent acquisitions of residential sites at Lentor Central and Lentor Hills Road will increase supply, "unsold inventory is expected to remain low in the short term, as developers are cautious in acquiring sites in the face of high inflation, surging interest rates, and macroeconomic uncertainties," Ong added. "The mismatch in price expectations between developers and sellers continues to have an impact on the success rate of collective sale deals, which in turn has an impact on future supply."
Rents for private homes increased 8.6 percent in Q3, compared to 6.7 percent the previous quarter, according to analysts, the fastest rate of growth since Q3 2007. The pandemic has thrown construction timelines off track, causing housing projects to be delayed.
Landed property rents increased by 10.9 percent, compared to 3.2 percent in the previous quarter, while non-landed property rents increased by 8.3 percent. Rents for such properties increased by 7.1% in the second quarter. The RCR had the highest rental increases in the non-landed market, at 9.6 percent, followed by the OCR and CCR, at 8.8 percent and 7%, respectively.
Rents have risen 20.8 percent in the first nine months of this year as a result, according to Leonard Tay, head of research at Knight Frank. "Rents in the private residential market will continue to rise in the remainder of 2022 and into 2023," he predicted, citing the re-opening of borders, new policies aimed at attracting professional talent, and locals looking for replacement homes as factors supporting the market. Furthermore, the most recent cooling measures included the imposition of a 15-month waiting period for those downgrading from private to HDB housing, which will drive some to the rental market.
Lam Chern Woon, Edmund Tie's head of research and consulting, expects rental growth to be more moderate next year as the backlog of completion delays is cleared and supply increases.
According to the URA, 3,619 units (including ECs) will be completed in the fourth quarter of this year, with an additional 20,098 units scheduled to be completed in 2023.
"Around 28,800 units (including ECs) are expected to be completed in 2022 and 2023, which is nearly three times the 10,400 units completed in 2020 and 2021," according to the URA. This will help to meet housing needs in the short term."
Oct 31, 2022
Private home prices may grow more slowly in Q4 after rising 3.8% in Q3 due to economic headwinds, the latest round of property cooling measures, and the year-end seasonal lull.
The increase in Q3, the tenth consecutive quarter of rising prices, accelerated from 3.5 percent in Q2 and was higher than the 3.4 percent flash estimate released earlier this month by the Urban Redevelopment Authority (URA).
Lee Sze Teck, senior director (research) at Huttons, predicts that private home prices will rise by 1 to 2% in Q4, but that full-year price growth will be between 9 and 10%. Private home prices increased by 8.2 percent in the first three quarters of the year.
According to Tricia Song, CBRE's head of research (South-east Asia), "the new measures could engineer a soft landing, with new private home sales growth and price growth to cool in the next six to 12 months." The government enacted new property cooling measures in late September to curb demand and ensure prudent borrowing. Song, on the other hand, does not anticipate a crash, citing healthy household balance sheets, limited unsold inventory, and a supportive rental market as reasons.
Wong Xian Yang, head of research at Cushman & Wakefield, predicts a slowing of price growth but believes developers are unlikely to lower prices at new launches. "Unsold inventory remains low, while land acquisition and construction costs remain high," he said. In light of potentially lower demand due to higher interest rates and an economic slowdown, developers are likely to slow their launch progress and re-calibrate their marketing strategies."
He predicts that private home prices will rise by 8 to 9% this year, then fall by 3 to 4% the following year.
The increase in private home prices in Q3 was led by non-landed home prices, which increased by 4.4% after increasing by 3.6% the previous quarter.
Non-landed home prices in the outside central region (OCR) increased the most - by 7.5% - thanks to major launches AMO Residence, Lentor Modern, and Sky Eden@Bedok; these developments saw brisk sales even at benchmark prices. As a result of demand from HDB upgraders, the median price of units sold at those projects in Q3 was all above S$2,100 per square foot (psf).
In comparison, non-landed home prices in the OCR increased by 2.1% in Q2.
Prices of non-landed homes increased by 2.3 percent in Q3, compared to 1.9 percent in Q2; prices increased by 2.8 percent in the rest of the central region (RCR), slowing from 6.4 percent in the previous quarter.
Lee noted that as the price gap between the CCR and RCR narrows, more buyers are flocking to the CCR. "As of Q3 2022, the estimated median (price) psf of new homes in the RCR was S$2,431, which was 13.5% lower than the CCR's median (price) psf." "Despite launching only 240 units for sale, developers sold 562 units in the CCR in Q3," he said.
Ismail Gafoor, CEO of PropNex Realty, stated that despite the strong Singapore dollar and persistent inflation, foreign buyers continue to look to residential property in Singapore as a means of wealth preservation. According to data from the URA's Realis platform, foreign buyers accounted for about 12% of non-landed new home sales in the CCR and RCR in Q3, up from 9% in Q2 and 6% in Q1.
Meanwhile, landed property prices increased by 1.6% in Q3, compared to 2.9% growth in the previous quarter.
https://i.imgur.com/lZlKpm5.png
Sales volumes in both the new and resale markets fell in the face of rising interest rates and higher prices. Analysts expect new sales volumes to fall in Q4 due to the upcoming seasonal lull, particularly as buyers and developers consider the latest cooling measures. According to CBRE Research, new home sales in 2022 will be around 8,000 units, down 39% year on year, and resale volumes will be around 14,000 units, down 40 to 45 percent year on year.
In the third quarter, resale transactions accounted for 60.5 percent of all private home sales. They totaled 3,719 units, down from 4,236 in the previous quarter.
In the third quarter, developers sold 2,187 private homes (excluding executive condominiums or ECs), with new sales volumes falling 8.8 percent quarter on quarter. They also put 1,455 units on the market, down from 1,956 in the previous quarter. Despite the fact that no EC units were released for sale during the quarter, developers sold 28 EC units.
Ong Teck Hui, JLL's senior director of research and consultancy, stated that unsold inventory remained low at 15,777 units as of the end of Q3 2022, which is less than half of the 37,799 units recorded during the previous pre-pandemic peak in Q1 2019. 15,677 of the 15,777 units were left unfinished.
"The market remains undersupplied, which has resulted in sustained price increases," he said.
Developers are also being more cautious when it comes to purchasing properties. While recent acquisitions of residential sites at Lentor Central and Lentor Hills Road will increase supply, "unsold inventory is expected to remain low in the short term, as developers are cautious in acquiring sites in the face of high inflation, surging interest rates, and macroeconomic uncertainties," Ong added. "The mismatch in price expectations between developers and sellers continues to have an impact on the success rate of collective sale deals, which in turn has an impact on future supply."
Rents for private homes increased 8.6 percent in Q3, compared to 6.7 percent the previous quarter, according to analysts, the fastest rate of growth since Q3 2007. The pandemic has thrown construction timelines off track, causing housing projects to be delayed.
Landed property rents increased by 10.9 percent, compared to 3.2 percent in the previous quarter, while non-landed property rents increased by 8.3 percent. Rents for such properties increased by 7.1% in the second quarter. The RCR had the highest rental increases in the non-landed market, at 9.6 percent, followed by the OCR and CCR, at 8.8 percent and 7%, respectively.
Rents have risen 20.8 percent in the first nine months of this year as a result, according to Leonard Tay, head of research at Knight Frank. "Rents in the private residential market will continue to rise in the remainder of 2022 and into 2023," he predicted, citing the re-opening of borders, new policies aimed at attracting professional talent, and locals looking for replacement homes as factors supporting the market. Furthermore, the most recent cooling measures included the imposition of a 15-month waiting period for those downgrading from private to HDB housing, which will drive some to the rental market.
Lam Chern Woon, Edmund Tie's head of research and consulting, expects rental growth to be more moderate next year as the backlog of completion delays is cleared and supply increases.
According to the URA, 3,619 units (including ECs) will be completed in the fourth quarter of this year, with an additional 20,098 units scheduled to be completed in 2023.
"Around 28,800 units (including ECs) are expected to be completed in 2022 and 2023, which is nearly three times the 10,400 units completed in 2020 and 2021," according to the URA. This will help to meet housing needs in the short term."