New Reporter
04-10-23, 11:47
URA Q3 flash data shows mixed picture for private residential prices
Overall price index up 0.5 per cent quarter on quarter in Q3, reversing 0.2 per cent drop in previous quarter; year on year, index is up 4 per cent
Oct 02, 2023
A MIXED picture has surfaced beneath the 0.5 per cent quarter-on-quarter rise in overall private home prices in the third quarter, based on official flash estimate data.
Prices of landed homes (islandwide) and prime-area private condo units and apartments fell 4.9 per cent and 2.6 per cent, respectively, in Q3 2023 over the previous quarter.
However, prices of non-landed private homes posted gains of 5.1 per cent in the suburbs or Outside Central Region (OCR) and 2.3 per cent in the city-fringe or Rest of Central Region (RCR). Market watchers attribute the gains to new launches in these two regions.
Knight Frank Singapore’s head of research Leonard Tay said: “New price points were established with the project launches in Q3 2023 largely reflecting the land prices that developers paid to acquire these sites 12 to 24 months ago.”
In a similar vein, Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, said: “Most of the new launches in Q3 2023 were from the OCR and RCR; thus, prices rose faster in these two segments.” Examples of new launches in OCR were Lentor Hills Residences, The Myst, The LakeGarden Residences and The Arden. Examples in RCR were Grand Dunman and Pinetree Hill.
However, these price trends might not last.
Cushman & Wakefield’s head of research for Singapore and South-east Asia, Wong Xian Yang, said: “The jump in OCR prices is likely to be one-off and OCR prices are expected to stabilise or see moderate growth. Given heightened pricing levels, buyers are more cost-sensitive.”
While developers do not face pressure to lower prices significantly as unsold inventory remains low and development costs stay elevated, new launches are likely to be priced competitively amid a higher new-launch pipeline, he added.
Wong is sanguine on the long-term outlook for the Core Central Region (CCR) or prime areas, despite near-term weakness that might persist as the market adjusts to the April 2023 cooling measures, which raised Additional Buyer’s Stamp Duty (ABSD) rates on foreigners, as well as local investors. “Structural demand remains unchanged – CCR’s central location, prestige and amenities are still sought-after. The CCR market also faces less oversupply risk with relatively lower levels of new completions in the pipeline compared to the other segments,” he added.
Lam Chern Woon, head of research and consulting at Edmund Tie, attributed the second consecutive quarter-on-quarter price drop for non-landed homes in CCR to the prohibitive ABSD rates for foreigners and local investors that took effect on Apr 27. “The recent high-profile money-laundering investigation has also dampened market sentiment in this segment,” he added.
https://i.imgur.com/KT0RtWj.png
Landed homes broke an eight-quarter streak of rising prices in the third quarter, slipping 4.9 per cent over the previous quarter. URA’s price index for landed homes rose 1.1 per cent in Q2 2023. Putting things in perspective, Lam said: “Landed residential was one of the segments that outperformed in 2022, with a 9.6 per cent price increase.”
The 2.6 per cent drop for non-landed prices in CCR in Q3 2023 followed a 0.1 per cent decline in Q2 2023.
In the OCR, the significant price rise of non-landed homes in Q3 2023 came after a 1.2 per cent increase in the previous quarter. In the RCR, however, the Q3 price gain contrasted with a 2.5 per cent decline in the previous quarter.
In Q2 2023, URA’s overall private home price index shed 0.2 per cent, widely credited to the April cooling measures.
The index is up 4 per cent year on year. It is also 3.6 per cent above the Q4 2022 level. Property consultants are expecting a full-year 2023 increase of between 2 per cent and 5.5 per cent. In 2022, the index rose 8.6 per cent after climbing 10.6 per cent in 2021.
URA said the 0.5 per cent quarter-on-quarter rise in the overall private home price index in Q3 was “significantly lower than the average quarterly increase of 2.1 per cent in 2022”.
Some 1,905 new private homes sold in Q3
CBRE’s analysis of URA data showed that based on preliminary figures, some 1,905 new private homes (excluding executive condo units) were sold in Q3 2023; this is 10.4 per cent lower than the 2,127 units moved in Q2 2023 despite a larger number of new projects and more units launched. “This could be attributed to weaker economic conditions and an indication of increased buyer selectiveness amid the myriad of available new launch options,” said Tricia Song, head of research for Singapore and South-east Asia at CBRE.
Lam of Edmund Tie observed that generally, developers have been restrained in their pricing strategy given the sombre economic outlook and tight financing environment. “Take-up rates of most new launches have declined by a notch to about 30-50 per cent in Q3 2023, compared with about 40-60 per cent in Q2 2023. More buyers are leaning towards a wait-and-see approach to gain clarity on whether price momentum can be sustained,” he added.
“The juxtaposition of a gradual price increase and a decline in transaction volume in Q3 2023 does raise doubts about the sustainability of price increases in this cycle,” Lam added.
Historical experience with cooling measures
JLL Singapore’s head of residential research, Chia Siew Chuin, who expects private homes prices to remain relatively stable in the next few quarters, noted that “recent market cooling measures prior to April 2023 did not have permanent effects on stabilising the residential market”.
“They resulted in just brief slips in prices or moderated price growths extending one to two quarters before demand and price increases picked up pace again,” she added.
Agreeing, Tay of Knight Frank said: “History has shown experienced investors familiar with Singapore’s private residential scene that this window of muted activity can turn quickly with the return of transactional activity once the external environment improves.”
Song of CBRE expects 6,500-7,000 new private homes to be sold in 2023, slightly lower than the 7,099 units in 2022. “Attractive developer pricing and stabilising interest rates in Q4 2023 remain key to bringing buyer confidence to the market.”
URA figures released on Monday showed that the total sale transaction volume of private homes (comprising new sales, resales and subsales) excluding EC units up to mid-September amounted to 4,569 units in Q3 2023, compared with 5,388 units in Q2 2023 and 6,148 units in Q3 2022.
Summing up, URA said: “Overall, private residential property prices remained broadly flat amid lower sale transaction volume in Q3 2023.”
Rental market stabilising, says Knight Frank
Separately, Knight Frank’s research shows that the rental market for non-landed private homes has reached a turning point. Based on its baskets of mass market, mid-end and high-end segments, rental values have declined between 2 per cent and 6 per cent in Q3 2023, contrasting with the 1 per cent to 3 per cent increases recorded in Q2.
However, rents in the ultra-luxury segment rebounded 5 per cent in Q3 against the 4 per cent drop in Q2. “Overall, the flatlining of rental increases signalled that the explosive growth in the last year has passed with the leasing market stabilising with more project completions and more interim renters obtaining their keys to their own home and exiting the rental market,” said Tay.
These trends will continue to persist for the next nine months, he added.
https://www.businesstimes.com.sg/property/ura-q3-flash-data-shows-mixed-picture-private-residential-prices
Overall price index up 0.5 per cent quarter on quarter in Q3, reversing 0.2 per cent drop in previous quarter; year on year, index is up 4 per cent
Oct 02, 2023
A MIXED picture has surfaced beneath the 0.5 per cent quarter-on-quarter rise in overall private home prices in the third quarter, based on official flash estimate data.
Prices of landed homes (islandwide) and prime-area private condo units and apartments fell 4.9 per cent and 2.6 per cent, respectively, in Q3 2023 over the previous quarter.
However, prices of non-landed private homes posted gains of 5.1 per cent in the suburbs or Outside Central Region (OCR) and 2.3 per cent in the city-fringe or Rest of Central Region (RCR). Market watchers attribute the gains to new launches in these two regions.
Knight Frank Singapore’s head of research Leonard Tay said: “New price points were established with the project launches in Q3 2023 largely reflecting the land prices that developers paid to acquire these sites 12 to 24 months ago.”
In a similar vein, Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, said: “Most of the new launches in Q3 2023 were from the OCR and RCR; thus, prices rose faster in these two segments.” Examples of new launches in OCR were Lentor Hills Residences, The Myst, The LakeGarden Residences and The Arden. Examples in RCR were Grand Dunman and Pinetree Hill.
However, these price trends might not last.
Cushman & Wakefield’s head of research for Singapore and South-east Asia, Wong Xian Yang, said: “The jump in OCR prices is likely to be one-off and OCR prices are expected to stabilise or see moderate growth. Given heightened pricing levels, buyers are more cost-sensitive.”
While developers do not face pressure to lower prices significantly as unsold inventory remains low and development costs stay elevated, new launches are likely to be priced competitively amid a higher new-launch pipeline, he added.
Wong is sanguine on the long-term outlook for the Core Central Region (CCR) or prime areas, despite near-term weakness that might persist as the market adjusts to the April 2023 cooling measures, which raised Additional Buyer’s Stamp Duty (ABSD) rates on foreigners, as well as local investors. “Structural demand remains unchanged – CCR’s central location, prestige and amenities are still sought-after. The CCR market also faces less oversupply risk with relatively lower levels of new completions in the pipeline compared to the other segments,” he added.
Lam Chern Woon, head of research and consulting at Edmund Tie, attributed the second consecutive quarter-on-quarter price drop for non-landed homes in CCR to the prohibitive ABSD rates for foreigners and local investors that took effect on Apr 27. “The recent high-profile money-laundering investigation has also dampened market sentiment in this segment,” he added.
https://i.imgur.com/KT0RtWj.png
Landed homes broke an eight-quarter streak of rising prices in the third quarter, slipping 4.9 per cent over the previous quarter. URA’s price index for landed homes rose 1.1 per cent in Q2 2023. Putting things in perspective, Lam said: “Landed residential was one of the segments that outperformed in 2022, with a 9.6 per cent price increase.”
The 2.6 per cent drop for non-landed prices in CCR in Q3 2023 followed a 0.1 per cent decline in Q2 2023.
In the OCR, the significant price rise of non-landed homes in Q3 2023 came after a 1.2 per cent increase in the previous quarter. In the RCR, however, the Q3 price gain contrasted with a 2.5 per cent decline in the previous quarter.
In Q2 2023, URA’s overall private home price index shed 0.2 per cent, widely credited to the April cooling measures.
The index is up 4 per cent year on year. It is also 3.6 per cent above the Q4 2022 level. Property consultants are expecting a full-year 2023 increase of between 2 per cent and 5.5 per cent. In 2022, the index rose 8.6 per cent after climbing 10.6 per cent in 2021.
URA said the 0.5 per cent quarter-on-quarter rise in the overall private home price index in Q3 was “significantly lower than the average quarterly increase of 2.1 per cent in 2022”.
Some 1,905 new private homes sold in Q3
CBRE’s analysis of URA data showed that based on preliminary figures, some 1,905 new private homes (excluding executive condo units) were sold in Q3 2023; this is 10.4 per cent lower than the 2,127 units moved in Q2 2023 despite a larger number of new projects and more units launched. “This could be attributed to weaker economic conditions and an indication of increased buyer selectiveness amid the myriad of available new launch options,” said Tricia Song, head of research for Singapore and South-east Asia at CBRE.
Lam of Edmund Tie observed that generally, developers have been restrained in their pricing strategy given the sombre economic outlook and tight financing environment. “Take-up rates of most new launches have declined by a notch to about 30-50 per cent in Q3 2023, compared with about 40-60 per cent in Q2 2023. More buyers are leaning towards a wait-and-see approach to gain clarity on whether price momentum can be sustained,” he added.
“The juxtaposition of a gradual price increase and a decline in transaction volume in Q3 2023 does raise doubts about the sustainability of price increases in this cycle,” Lam added.
Historical experience with cooling measures
JLL Singapore’s head of residential research, Chia Siew Chuin, who expects private homes prices to remain relatively stable in the next few quarters, noted that “recent market cooling measures prior to April 2023 did not have permanent effects on stabilising the residential market”.
“They resulted in just brief slips in prices or moderated price growths extending one to two quarters before demand and price increases picked up pace again,” she added.
Agreeing, Tay of Knight Frank said: “History has shown experienced investors familiar with Singapore’s private residential scene that this window of muted activity can turn quickly with the return of transactional activity once the external environment improves.”
Song of CBRE expects 6,500-7,000 new private homes to be sold in 2023, slightly lower than the 7,099 units in 2022. “Attractive developer pricing and stabilising interest rates in Q4 2023 remain key to bringing buyer confidence to the market.”
URA figures released on Monday showed that the total sale transaction volume of private homes (comprising new sales, resales and subsales) excluding EC units up to mid-September amounted to 4,569 units in Q3 2023, compared with 5,388 units in Q2 2023 and 6,148 units in Q3 2022.
Summing up, URA said: “Overall, private residential property prices remained broadly flat amid lower sale transaction volume in Q3 2023.”
Rental market stabilising, says Knight Frank
Separately, Knight Frank’s research shows that the rental market for non-landed private homes has reached a turning point. Based on its baskets of mass market, mid-end and high-end segments, rental values have declined between 2 per cent and 6 per cent in Q3 2023, contrasting with the 1 per cent to 3 per cent increases recorded in Q2.
However, rents in the ultra-luxury segment rebounded 5 per cent in Q3 against the 4 per cent drop in Q2. “Overall, the flatlining of rental increases signalled that the explosive growth in the last year has passed with the leasing market stabilising with more project completions and more interim renters obtaining their keys to their own home and exiting the rental market,” said Tay.
These trends will continue to persist for the next nine months, he added.
https://www.businesstimes.com.sg/property/ura-q3-flash-data-shows-mixed-picture-private-residential-prices