Prices of new condos on the city's periphery are creeping closer to those in the core

Prices of new condos on the city's periphery are creeping closer to those in the core district

Sep 22, 2022

According to a recent research from Huttons Asia, the difference in the median price per square foot (psf) between new, non-landed residences in the Core Central Region (CCR) and those in the Rest of the Central Region (RCR) shrunk to 14.9% in August after having grown to 25.0% in April.

In general, the prices of residences in the CCR are higher than those in the RCR and outside of the Central Region (OCR). According to the senior director of research at Huttons, the price differential between CCR and RCR new non-landed residences was around 42.7% over the last ten years. This information was provided by Lee Sze Teck.

Since June, there has been an increase in the price of psf in the RCR, which has caused the median price paid for a new non-landed house in that region to surpass that of the CCR. As of the month of August, the median price of a newly built apartment or condominium in the RCR was 2.47 million Singapore dollars, which is 10.8 percent more than the median price in the CCR.

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Christine Sun, who is the senior vice president of research and analytics at OrangeTee & Tie, has seen that the pricing difference between the two companies is getting smaller.

She mentioned the possibility of a new benchmark price developing in the RCR in a study that was published in the month of May. This is because more condominiums are being sold at prices that are comparable to those of luxury condos. For example, 93.3% of newly constructed condominiums in the RCR were sold at prices of between S$1,000 and S$2,000 per square foot (psf) five years ago. Price ranges have now increased, with 80.9% of newly built condominiums in that area selling for between $1,500 and $2,500 per square foot (psf) in the previous year. The percentage of transactions that were above S$2,500 psf increased to 19.1 percent in 2021, which was a significant increase from the percentage of 0.4 percent in 2017.

According to Sun, the median price of new condominiums, excluding executive condominiums, has been increasing over the last several months. According to Sun, the median price has increased from S$1,928 psf in January to S$2,644 psf in August, which is an increase of 37.1 percent.

She pointed out that "the price rise was mostly led by the condominiums in RCR," where the median price has increased by 24.1% over the previous 8 months, going from S$1,964 psf in January to S$2,437 psf. "The price increase was primarily driven by the condominiums in RCR," she said.

According to Sun, certain RCR values are getting closer and closer to the S$3,000 psf level, which is the price threshold for luxury properties that are located near the Downtown Core. These include such endeavours as the Canninghill Piers, Rivière, and Sky Everton developments.

According to her, there are a few other factors that could be contributing to the increase in RCR prices. These factors include the condo being a part of an integrated development, the condo having good views, and the condo being built by top developers who are known for having high-quality finishes.

According to Lee of Huttons, a window has emerged in the CCR for purchasers to acquire a home of a comparable size with the same budget as that for an RCR property. This window comes as a result of the decreasing price disparity.

Due to the fact that buyers have come to this realisation, developers have been able to sell an expected 199 CCR houses per month between the months of April and August. This is a 66.7 percent increase over the monthly average seen in the first quarter of 2022.

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This hasn't happened since October of last year; the last time it did, developer sales in the CCR accounted for half of the overall sales in the month of August.

According to Lee, if the price gap between CCR and RCR homes returns to the average of about 40 percent that it was during the previous decade, then the median price for CCR homes could potentially increase to S$3,400 psf from the current level of S$2,801 psf, which would be an increase of more than 20 percent.

However, Sun stated that healthy sales in the CCR are an indication that people are beginning to see the value of luxury homes in comparison to RCR ones. However, she added that, in addition to the psf price, the quantum for CCR homes could still put them out of reach because the unsold units could be the larger ones.