reporter2
04-01-23, 09:19
Private home price rise slows to 0.2% in Q4 as suburban prices drop; 2022 chalks up increase of 8.4%
Jan 03, 2023
PRIVATE residential property prices inched up 0.2 per cent in the fourth quarter of 2022 after growing 3.8 per cent in the third quarter, finishing the year with a rise of 8.4 per cent, compared to the 10.6 per cent increase in 2021. Generally, analysts are expecting a slower price growth this year.
Knight Frank’s head of research, Leonard Tay, said that 2022’s 8.4 per cent price rise is “beyond expectation at the beginning of the year, when the December 2021 cooling measures set a conservative cloud on projections”.
But with each subsequent new project, a significant number of units sold out within 48 hours of launch and prices continued to climb. These projects – mainly in the rest of central region (RCR) and outside central region (OCR) – stirred so much homebuyer interest that the combination of recessionary pressures, inflation, unrelenting interest rates hikes and cooling measures were not able to rein in demand and the consequent price increases between Q2 and Q3 2022, he noted.
https://i.imgur.com/M3lm8a2.png
Flash estimates released by the Urban Redevelopment Authority (URA) on Monday (Jan 3) are based on data till mid-December. They also show a decline in private housing sales, with transaction volume falling by about 49 per cent quarter on quarter and by about 60 per cent on year on year in Q4. For the whole of 2022, sale transaction volume fell by about 36 per cent to 21,437 from 33,557 in 2021.
Analysts said the drop in Q4 sales volume is due to a dearth of launches during the holiday season and also locals going overseas as border controls were mostly eased worldwide.
Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, said that according to URA Realis data, only 666 new homes, excluding executive condominiums (ECs), were sold in Q4, down 69.1 per cent from 2,157 units sold in the preceding quarter. Resales, however, dipped only 36.4 per cent from 3,710 units to 2,360 units over the same period.
As a result, the proportion of new sales fell to as low as 21 per cent in Q4 2022 from 35.4 per cent in Q3, while resales formed the bulk of the 74.4 per cent of total sales last quarter, up from 60.9 per cent in Q3.
“Therefore, the weighted average price for the entire market may have been lowered by the higher proportion of resale transactions, as these homes are typically sold at cheaper prices than new homes,” said Sun.
Prices of non-landed private residential properties in the core central region (CCR) increased by 0.5 per cent in Q4, compared to the 2.3 per cent increase in Q3. Prices in the RCR increased by 2.6 per cent, versus the 2.8 per cent growth in the previous quarter. Prices in the OCR fell by 2.6 per cent, compared to the 7.5 per cent increase in Q3.
ERA Realty’s head of research and consultancy Nicholas Mak said this “may raise some eyebrows”, as new project units in the OCR were snagged at a rapid pace even when property prices there reached a new high of above S$2,000 per square foot, giving the impression that there is significant strength in the increase of suburban condominium prices.
Lee Sze Teck, Huttons Asia’s senior director of research, attributed the drop in OCR prices to suburban market prices being more sensitive to interest rate hikes and demand from Housing and Development Board (HDB) upgraders. “The higher interest rate is affecting demand from price-sensitive buyers as their ability to borrow is crimped,” he said, adding that price growth in the HDB resale market is also slowing down, thus reducing some of the liquidity for HDB upgraders.
Of the three market segments, the RCR emerged as the winner with an increase of 2.6 per cent in Q4. With OCR home prices rising in the first three quarters of 2022, some homebuyers may have decided to top up their budget slightly to purchase a property in the RCR, which is located nearer to the city centre, said ERA’s Mak.
For the whole of 2022, prices in the CCR, RCR and OCR increased by 4.6 per cent, 9.2 per cent and 9.3 per cent, respectively.
Noting that the CCR has registered the lowest annual price gain for two years running compared to the RCR and OCR, Knight Frank’s Tay said demand for high-end homes were curtailed by travel restrictions during the pandemic years.
Even when Singapore opened up from April 2022, countries in the region which traditionally comprise some of the high-net-worth buyers who prefer acquiring homes in Singapore remained closed to cross-border travel.
“As prices in the CCR have not increased as much as in the rest of Singapore, it now remains to be seen whether transaction volume and prices of homes in the CCR will gain traction after China relaxes its quarantine requirements for travel after Jan 8,” said Tay.
According to Lee Nai Jia, PropertyGuru’s head of real estate intelligence, data and software solutions, the top-performing non-landed private residential projects (excluding ECs) in 2022 based on caveats lodged as at Dec 28 are: Lentor Modern (519 units), Normanton Park (376 units), AMO Residence (367 units), Piccadilly Grand (344 units) and Liv @ MB (248 units).
The top performing non-landed private residential projects (excluding ECs) for Q4 2022 were Perfect Ten (54 units), Riviere (38 units) and Leedon Green (31 units).
Wong Xian Yang, head of research at Cushman & Wakefield, highlighted that landed property prices rose 9.5 per cent year on year in 2022, outperforming those for non-landed homes which grew 8 per cent. “Landed prices remain underpinned by their limited supply and strong underlying local demand,” he said.
Even though 17,000-plus new private homes are slated for completion in 2023, with the possibility of some 12,000 units launched, Knight Frank’s Tay said the undersupply of new private homes continues to prevail at the start of this year.
“Given that the tight supply will take some time to ease throughout the next 12 months, homebuyer demand will remain strong with each new launch that is characterised by good property attributes at the correct price points, so long as the unemployment rate remains low,” he said.
Still, he said, private home prices are unlikely to increase as much as they did in the past two years, due to the cumulative effect of a gloomy economic outlook, high interest rates and the additional buyer’s stamp duty for foreigners. He projects private home prices to grow by a more moderate 5 to 7 per cent for 2023.
Meanwhile, PropertyGuru’s Lee said that he does not expect prices in the resale segment to dip any time soon, due to limited supply and owners being unlikely to lower their prices in the short term.
“New launches in 2023 are expected to perform well, but their performance is largely linked to the limited options in the immediate term,” Lee added.
Cushman & Wakefield’s Wong said the market could surprise on the upside in Q1 2023, as developers push out new launches catering to resilient buying demand amid still-low levels of unsold inventory.
Apart from a tight labour market that should outweigh the effects of rising interest rates, thereby supporting buyer demand, he noted that HDB resale prices continue to rise, albeit at a slower pace, and would sustain HDB buyer demand.
As at Q3 2022, total unsold inventory remained at about 16,000 units, significantly below the five-year average of about 25,000 units, he added.
“Barring an unexpected deterioration in economic conditions, we are cautiously optimistic that private residential prices could trend higher, by up to 3 per cent in 2023,” said Wong.
From the supply side, developers’ strong financial position and low unsold inventory will give them little pressure to reduce prices, said Chia Siew Chuin, head of residential research at JLL, who believes private home prices will continue rising at a slower rate of 2 to 4 per cent in 2023.
CBRE Research expects new private home prices to rise 3 to 5 per cent this year, with upside supported by low unsold inventory, healthy household balance sheets, and higher rents.
Likewise, ERA’s Mak said new private property prices are unlikely to face a correction in 2023 and projects private property prices to grow by another 4 to 9 per cent this year.
Huttons’ Lee said that while interest rates are expected to peak this year, they are not expected to affect demand for new launches as the drawdown on loan is on a progressive basis. However, higher interest rates may weigh on the resale market. He anticipates private home prices rising by up to 5 per cent in 2023.
PropNex Realty’s chief executive, Ismail Gafoor, said the moderation in price growth in Q4 2022 is “not a bad thing for the overall market” as it helps to keep home prices sustainable, adding that prices will rise at a slower 5 to 6 per cent this year.
“Overall, we expect the demand for homes in Singapore to remain stable in 2023, barring a deep recession,” he said.
https://www.businesstimes.com.sg/property/private-home-price-rise-slows-02-q4-suburban-prices-drop-2022-chalks-increase-84
Jan 03, 2023
PRIVATE residential property prices inched up 0.2 per cent in the fourth quarter of 2022 after growing 3.8 per cent in the third quarter, finishing the year with a rise of 8.4 per cent, compared to the 10.6 per cent increase in 2021. Generally, analysts are expecting a slower price growth this year.
Knight Frank’s head of research, Leonard Tay, said that 2022’s 8.4 per cent price rise is “beyond expectation at the beginning of the year, when the December 2021 cooling measures set a conservative cloud on projections”.
But with each subsequent new project, a significant number of units sold out within 48 hours of launch and prices continued to climb. These projects – mainly in the rest of central region (RCR) and outside central region (OCR) – stirred so much homebuyer interest that the combination of recessionary pressures, inflation, unrelenting interest rates hikes and cooling measures were not able to rein in demand and the consequent price increases between Q2 and Q3 2022, he noted.
https://i.imgur.com/M3lm8a2.png
Flash estimates released by the Urban Redevelopment Authority (URA) on Monday (Jan 3) are based on data till mid-December. They also show a decline in private housing sales, with transaction volume falling by about 49 per cent quarter on quarter and by about 60 per cent on year on year in Q4. For the whole of 2022, sale transaction volume fell by about 36 per cent to 21,437 from 33,557 in 2021.
Analysts said the drop in Q4 sales volume is due to a dearth of launches during the holiday season and also locals going overseas as border controls were mostly eased worldwide.
Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, said that according to URA Realis data, only 666 new homes, excluding executive condominiums (ECs), were sold in Q4, down 69.1 per cent from 2,157 units sold in the preceding quarter. Resales, however, dipped only 36.4 per cent from 3,710 units to 2,360 units over the same period.
As a result, the proportion of new sales fell to as low as 21 per cent in Q4 2022 from 35.4 per cent in Q3, while resales formed the bulk of the 74.4 per cent of total sales last quarter, up from 60.9 per cent in Q3.
“Therefore, the weighted average price for the entire market may have been lowered by the higher proportion of resale transactions, as these homes are typically sold at cheaper prices than new homes,” said Sun.
Prices of non-landed private residential properties in the core central region (CCR) increased by 0.5 per cent in Q4, compared to the 2.3 per cent increase in Q3. Prices in the RCR increased by 2.6 per cent, versus the 2.8 per cent growth in the previous quarter. Prices in the OCR fell by 2.6 per cent, compared to the 7.5 per cent increase in Q3.
ERA Realty’s head of research and consultancy Nicholas Mak said this “may raise some eyebrows”, as new project units in the OCR were snagged at a rapid pace even when property prices there reached a new high of above S$2,000 per square foot, giving the impression that there is significant strength in the increase of suburban condominium prices.
Lee Sze Teck, Huttons Asia’s senior director of research, attributed the drop in OCR prices to suburban market prices being more sensitive to interest rate hikes and demand from Housing and Development Board (HDB) upgraders. “The higher interest rate is affecting demand from price-sensitive buyers as their ability to borrow is crimped,” he said, adding that price growth in the HDB resale market is also slowing down, thus reducing some of the liquidity for HDB upgraders.
Of the three market segments, the RCR emerged as the winner with an increase of 2.6 per cent in Q4. With OCR home prices rising in the first three quarters of 2022, some homebuyers may have decided to top up their budget slightly to purchase a property in the RCR, which is located nearer to the city centre, said ERA’s Mak.
For the whole of 2022, prices in the CCR, RCR and OCR increased by 4.6 per cent, 9.2 per cent and 9.3 per cent, respectively.
Noting that the CCR has registered the lowest annual price gain for two years running compared to the RCR and OCR, Knight Frank’s Tay said demand for high-end homes were curtailed by travel restrictions during the pandemic years.
Even when Singapore opened up from April 2022, countries in the region which traditionally comprise some of the high-net-worth buyers who prefer acquiring homes in Singapore remained closed to cross-border travel.
“As prices in the CCR have not increased as much as in the rest of Singapore, it now remains to be seen whether transaction volume and prices of homes in the CCR will gain traction after China relaxes its quarantine requirements for travel after Jan 8,” said Tay.
According to Lee Nai Jia, PropertyGuru’s head of real estate intelligence, data and software solutions, the top-performing non-landed private residential projects (excluding ECs) in 2022 based on caveats lodged as at Dec 28 are: Lentor Modern (519 units), Normanton Park (376 units), AMO Residence (367 units), Piccadilly Grand (344 units) and Liv @ MB (248 units).
The top performing non-landed private residential projects (excluding ECs) for Q4 2022 were Perfect Ten (54 units), Riviere (38 units) and Leedon Green (31 units).
Wong Xian Yang, head of research at Cushman & Wakefield, highlighted that landed property prices rose 9.5 per cent year on year in 2022, outperforming those for non-landed homes which grew 8 per cent. “Landed prices remain underpinned by their limited supply and strong underlying local demand,” he said.
Even though 17,000-plus new private homes are slated for completion in 2023, with the possibility of some 12,000 units launched, Knight Frank’s Tay said the undersupply of new private homes continues to prevail at the start of this year.
“Given that the tight supply will take some time to ease throughout the next 12 months, homebuyer demand will remain strong with each new launch that is characterised by good property attributes at the correct price points, so long as the unemployment rate remains low,” he said.
Still, he said, private home prices are unlikely to increase as much as they did in the past two years, due to the cumulative effect of a gloomy economic outlook, high interest rates and the additional buyer’s stamp duty for foreigners. He projects private home prices to grow by a more moderate 5 to 7 per cent for 2023.
Meanwhile, PropertyGuru’s Lee said that he does not expect prices in the resale segment to dip any time soon, due to limited supply and owners being unlikely to lower their prices in the short term.
“New launches in 2023 are expected to perform well, but their performance is largely linked to the limited options in the immediate term,” Lee added.
Cushman & Wakefield’s Wong said the market could surprise on the upside in Q1 2023, as developers push out new launches catering to resilient buying demand amid still-low levels of unsold inventory.
Apart from a tight labour market that should outweigh the effects of rising interest rates, thereby supporting buyer demand, he noted that HDB resale prices continue to rise, albeit at a slower pace, and would sustain HDB buyer demand.
As at Q3 2022, total unsold inventory remained at about 16,000 units, significantly below the five-year average of about 25,000 units, he added.
“Barring an unexpected deterioration in economic conditions, we are cautiously optimistic that private residential prices could trend higher, by up to 3 per cent in 2023,” said Wong.
From the supply side, developers’ strong financial position and low unsold inventory will give them little pressure to reduce prices, said Chia Siew Chuin, head of residential research at JLL, who believes private home prices will continue rising at a slower rate of 2 to 4 per cent in 2023.
CBRE Research expects new private home prices to rise 3 to 5 per cent this year, with upside supported by low unsold inventory, healthy household balance sheets, and higher rents.
Likewise, ERA’s Mak said new private property prices are unlikely to face a correction in 2023 and projects private property prices to grow by another 4 to 9 per cent this year.
Huttons’ Lee said that while interest rates are expected to peak this year, they are not expected to affect demand for new launches as the drawdown on loan is on a progressive basis. However, higher interest rates may weigh on the resale market. He anticipates private home prices rising by up to 5 per cent in 2023.
PropNex Realty’s chief executive, Ismail Gafoor, said the moderation in price growth in Q4 2022 is “not a bad thing for the overall market” as it helps to keep home prices sustainable, adding that prices will rise at a slower 5 to 6 per cent this year.
“Overall, we expect the demand for homes in Singapore to remain stable in 2023, barring a deep recession,” he said.
https://www.businesstimes.com.sg/property/private-home-price-rise-slows-02-q4-suburban-prices-drop-2022-chalks-increase-84