Due to cooling measures, private property prices in Singapore grew 0.7% in the first quarter, slightly higher than flash forecasts provided earlier this month but lower than the 5% increase in the previous quarter.
According to real estate figures provided by the Urban Redevelopment Authority (URA) on Friday, the private residential property price index grew to 174.8 points in the first quarter, up from 173.6 points the previous quarter, owing to landed properties (Apr 22).
Landed properties had a 4.2 percent increase in prices, compared to a 3.9 percent increase in the preceding quarter.
Non-landed property prices, on the other hand, fell by 0.3 percent, reversing a 5.3 percent increase in the fourth quarter of 2021.
Non-landed property prices in the Core Central Region (CCR) fell by 0.1 percent in the first quarter, compared to a 2.7 percent increase the previous quarter.
Non-landed property prices in the Rest of Central Region (RCR) fell by 2.7 percent in Q4 2021, reversing a 6.7 percent increase in Q4 2021. Meanwhile, prices in the Outside Central Region (OCR) increased by 2.2%, compared to a 5.7% increase the previous quarter.
The decline was linked by analysts to the cooling measures implemented last December as well as macroeconomic uncertainty.
Nevertheless, Mr Leonard Tay, head of research at Knight Frank Singapore, says “undercurrents of owner-occupier homebuyer and upgrader demand remain strong should buyers be able to find suitable homes.”
Rentals
Private property rentals increased by 4.2 percent in the first quarter, up from 2.6 percent the previous quarter.
The landed and non-landed properties segments also contributed to this. Landed home rentals climbed by 5.3 percent in Q1 2022, compared to 1.2 percent the previous quarter, while non-landed property rentals increased by 4.1 percent, up from 2.7 percent in Q4 2021.
According to Ms Christine Sun, senior vice president of research and analytics at OrangeTee & Tie, rents were driven up by a dwindling rental stock and a shortage of new house supply.
Future purchasers who were priced out of the market or harmed by the cooling measures resorted to the rental market, which boosted demand and drove rents higher, according to Ms Sun.
Mr Tay of Knight Frank anticipated that overall rentals in the private housing market will rise by 7% to 9% in 2022.
Takeup and Launches
Developers introduced 613 unfinished private residential units, excluding executive condominiums (ECs), in the first quarter of 2022, a considerable decrease from the 2,275 units launched the previous quarter. In the first quarter, they sold 1,825 units excluding ECs, compared to 3,018 in the previous quarter.
In the first quarter, developers did not offer any units for sale in the executive condominium segment, but 131 units were sold. This compares to 260 units sold in the prior quarter, when EC units were also unavailable.
According to Mr Mohan Sandrasegeran, research & content analyst at Ohmyhome, the dip to an all-time low of 613 units in Q1 2022 was due to a dearth of large project launches or mega developments with 1,000 units or more.
Mr Mohan noted that this was the worst reduction since the second quarter of 2020, when 1,713 units were sold.
Supply in the Pipeline
There were 47,415 unfinished private residential units and 5,333 EC units in the pipeline with planning approvals at the end of the first quarter.
As of the end of the first quarter, 14,087 private homes and 1,878 EC units remained unsold.
According to Ms Sun, cost constraints may play a bigger part in deciding the future trajectory of home prices in the coming months, with inflation and a greater cost of living forcing home prices to climb even more.
In her words, “The market could shift from a ‘demand-driven’ price increase to a ‘cost-driven’ price increase. Supply chain issues as well as a rise in energy, steel, raw material and shipping costs due to the Russia-Ukraine war and political sanctions may drive construction costs higher.”
“Climbing land prices and wage rises may further affect the bottom line of companies. Some sellers may pass the additional costs to consumers, leading to higher home prices in the coming months,” she added.
In her opinion, “to combat rising inflation, interest rates will be raised a few times this year. While higher mortgage rates may test the affordability threshold of some buyers, others may rush into the market to lock in home loans before they climb higher.”
