Condo resale volumes rise 50.3% in February; first increase after four months: SRX, 99.co

Mar 28, 2023

RESALE volumes of private condominiums rose for the first time since October 2022, driven by pent-up demand after the Chinese New Year period.

Flash estimates from SRX and 99.co on Tuesday (Mar 28) showed that 756 units were resold in February 2023, a 50.3 per cent increase from the 503 units resold in January.

However, sales volumes were still 4.2 per cent lower than they were in February 2022 and 4.1 per cent lower than the five-year average volumes for the month of February.

Nearly half of February’s transactions were in the Outside Central Region (OCR), while 28 per cent were in the Rest of Central Region (RCR). Core Central Region (CCR) units constituted 23.2 per cent of total deals.

Head of research at 99.co Pow Ying Khuan believes that the increase in volume is partly due to buyers rushing to complete their home purchases in response to the increase in Buyer Stamp Duty for higher-value residential and non-residential properties announced in mid-February.

Huttons Asia chief executive officer Mark Yip noted that the strong demand for properties in the OCR may be a result of how properties priced at S$1.5 million and below are usually found in the region.

He said: “Some buyers may have turned to the resale market seeking properties below S$1.5 million.”

“The stronger demand may have pushed prices (in the OCR) up by 2.3 per cent in February.”

SRX and 99.co note that overall condo resale prices rebounded in February, rising 1.4 per cent month on month.

In the RCR, prices rose 1.4 per cent, while CCR prices dipped 0.3 per cent.

On a year-on-year basis, overall condo resale prices rose by 9.2 per cent, with increases of 11.5 per cent in the OCR, 7.3 per cent in the RCR and 6.6 per cent in the CCR.

The highest transacted price in February stood at S$20.5 million for a resale unit at Nassim Park Residences.

In the RCR, the highest transacted price was for a unit at Reflections At Keppel Bay, which was resold for S$8.2 million. A unit at Waterfront Isle topped the OCR price chart at S$3.7 million.

The overall median capital gain for resale condos was S$300,000 in February – an increase of S$26,000 from the month before.

The overall median unlevered return for resale condos stood at 27.3 per cent in February. District 21 (Clementi Park/ Upper Bukit Timah) had the highest median unlevered return while District 4 (Harbourfront/Telok Blangah) had the lowest.

Analysts noted, however, that February’s sales rebound may not mean that the property market will continue its upward trajectory.

Christine Sun, OrangeTee & Tie’s senior vice-president of research and analytics, said: “The resale market continues to face headwinds from global economic uncertainties stemming from the banking crisis.

“Moreover, mortgage rates and borrowing costs are likely to remain elevated even as the Fed has indicated that the central bank could scale back the pace of its interest rate hikes if the banking crisis worsens.”

Huttons Asia’s Yip believes however that a smaller interest rate hike by the United States Federal Reserve could be a silver lining.

“A smaller rate increase by the US Fed may mean a smaller increase in borrowing costs and may help the resale condo market,” he said.

OrangeTee’s Sun said that demand for resale condos will still remain, as the price gap between new and resale condos will push some buyers from the primary to the secondary market.

“Big resale units and suburban condos will continue to draw buyers. More units could be put up for resale in the coming months, as a growing number of condos will be obtaining Temporary Occupation Permit.”

ERA’s key executive officer, Eugene Lim, added that larger condo units are sought after by an increasing number of foreign buyers returning to the Singapore market.

He said: “Larger sized homes in prime or central locations are on their shopping list and as such, resale condominiums in this prime market segment may be poised for growth over the course of the year.”

https://www.businesstimes.com.sg/pro...onths-srx-99co