SINGAPORE - Private residential prices climbed 3.9 per cent in the first quarter of 2018, handily beating a flash estimate of 3.1 per cent growth, according to data from the Urban Redevelopment Authority (URA) on Friday (April 27).
This marks the steepest quarter-on-quarter gain since the second quarter of 2010, when the index gained 5.3 per cent.
Private home prices posted a quarter-on-quarter rise of 0.8 per cent in the fourth quarter of 2017 and a 0.7 per cent rise in the third quarter, after bottoming in the second quarter of last year.
Non-landed home prices led the way this quarter with a 4.4 per cent increase, compared with last quarter's 0.8 per cent rise.
Landed properties rose by 1.9 per cent, compared with the quarter ago's 0.5 per cent increase.
By region, prices of non-landed homes in the outside central region (OCR) homes outperformed the rest by posting 5.6 per cent in gains, compared to the 0.8 per cent increase in the previous quarter.
Such properties in the core central region (CCR) saw prices rise by 5.5 per cent, compared with the quarter ago's increase of 1.4 per cent. Prices of those in the city fringe or rest of central region (RCR) area increased by 1.2 per cent, higher than the 0.4 per cent growth in the previous quarter.
The overall vacancy rate for private homes fell by 0.4 percentage point to 7.4 per cent.
Lee Nai Jia, head of research for Edmund Tie & Company (ET & Co), said: “The market is on the uptrend. The increase in price is supported by strong demand from buyers seeking replacement homes and foreign home buyers.”
PropNex Realty’s chief executive officer Ismail Gafoor said: “We can see buyers and investors now taking action in both new and resale segments, with the bullish lands bids and continuous collective sales.”
Private home rents edged up 0.3 per cent, after declining 0.9 per cent in the previous quarter.
Landed property rentals remained unchanged, compared to a 1.3 per cent decrease in the fourth quarter. But rents for non-landed properties increased 0.3 per cent compared with the quarter ago’s 0.8 per cent decrease.
Nicholas Mak, executive director of ZACD Group, said the en bloc market could be pushing private residential property rentals into recovery since residents, including tenants, would have to find alternative housing when the development is sold.
There were also fewer options in the secondary market since more sellers were holding out for a collective sale, said Dr Lee of ET & Co.
Another sign of the collective sales fever at work was the year-on-year jump in the number of resale transactions. Of the total 5,328 private homes sold in the first quarter, 68.8 per cent or 3,666 were from the resale market. This was a jump of 68.9 per cent from the 2,170 resale homes sold in the same quarter a year ago.
“(There is) greater demand from ‘en blocers’ finding replacement homes on the resale market, coupled with attractive price points of resale properties in comparison to some of the new launches,” said Mr Ismail from PropNex.
As at the end of the first quarter this year, there were 44,261 units in the pipeline with planning approvals including executive condominium or EC units, with 24,193 units of unsold supply in the pipeline – the highest since the third quarter of 2016 when 25,211 were unsold.
Mr Ismail predicts private home prices will rise 8 to 10 per cent for the whole year. “Higher price points at new launches will bring up the overall selling prices of the resale and existing launches moving forward,” he said.
But Dr Lee believes that prices could go up by 8 to 12 per cent for the year, and that the supply of unsold units will not derail the upswing in sales and prices. Based on the level of demand seen in the past run-up in the market between 2009 and 2013, he believes this upcoming supply can be absorbed.
However, Mr Mak said it remains to be seen whether there is enough demand in the market for the pipeline supply, especially if new projects are at launched higher prices.
He noted that developers launched more new private housing units excluding ECs in the first quarter of 2018 compared to the last quarter, at 921, up from 877 units. But they sold fewer units in the quarter – 1,581 versus 1,864 units in the previous quarter.