Singapore private home prices jump 2.9% in first quarter, raising prospect of cooling measures, Property News & Top Stories

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SINGAPORE – Private house prices in Singapore rose for a fourth consecutive quarter, jumping 2.9% in the first three months of this year, raising bets on a new round of cooling measures.

This is the biggest quarterly increase since the second quarter of 2018, when private house prices rose 3.4% before real estate restrictions hit in July of the same year.

It follows a 2.1% increase in the fourth quarter of last year and 0.8% in the third quarter, according to the Urban Redevelopment Authority (URA) flash estimate released Thursday morning (April 1) .

Year on year, prices jumped 6.2%.

Four straight quarters of price increases totaling 9.1%, along with higher than expected bids for government land sales and record collective selling prices, precipitated the July 2018 series of cooling measures.

Mr. Ismail Gafoor, Managing Director of PropNex, noted that the pace of price growth, especially over the past two quarters, will certainly attract government attention and may increase the risk of introducing new cooling measures. .

“We believe final price data for the first and second quarters of this year will be closely watched and that a stronger recovery in home values ​​could likely trigger further measures to control prices.

He added that prices for private resale homes have also risen in recent months, driven by strong demand, firm introductory prices and a recovery in HDB resale prices.

But some market watchers have cast cold water on the prospects of yet another round of cooling measures.

Mr Nicholas Mak, head of research and advice at ERA, pointed out that the current rate of price growth is not as fast as that of the period leading up to the July 2018 cooling measures.

“The house price index is not the only indicator that will influence whether there is another turn of the brake in the market. The government is probably looking at many other indicators, such as the volume of real estate transactions, the size of household debt and size of total loans from banks in Singapore that are tied to home loans, ”he said.

In addition, Singapore’s economy is still weak and the construction sector is one of the hardest hit sectors with production contracting 35.9% last year, he added.

A new round of cooling measures would hit the real estate market and, in turn, the construction sector, which could hamper economic recovery, Mak said.

A persistent sharp rise in private house prices over the next few quarters will increase the prospect of further cooling measures, analysts said.

Other factors may be taken into account, such as whether house price increases outstrip the economic recovery and whether they generally occur or remain localized in certain regions.

The latest data from URA showed that prices for non-land properties rose 2.1% in the first quarter, following a slight increase of 3% in the previous quarter.

Meanwhile, property prices climbed 5.6% in the first quarter, reversing from a 1.6% decline in the previous quarter.

The increase in prices in the first quarter was mainly due to more expensive non-land housing on the outskirts of the city or in the rest of the central region (RCR), which jumped 6.1% quarter-on-quarter, from 4.4 % in the past three months, said Christine Sun, senior vice president of research and analytics at OrangeTee & Tie.

For example, The Reef at King’s Dock ($ 2,257 per square foot, 337 units), Amber Park ($ 2,445 per square foot, 66 units), Avenue South Residence ($ 2,099 per square foot, 43 units) and One Pearl Bank ($ 2,407 per square foot) ft, 34 units) were traded above $ 2,000 per square foot.

Normanton Park, which posted the highest transaction of 720 units last quarter, changed hands at a median price of $ 1,765 per square foot. That’s higher than the median price of $ 1,704 per square foot for homes without land in the RCR in the fourth quarter of 2020.

Prices for non-land housing on the outskirts of the city and in the suburbs hit record highs in the last quarter, Sun added. In the suburbs or outside the central region, prices rose 0.9%, after rising 1.8% in the previous quarter.

In contrast, prices in the central core region (CCR), or prime areas, fell 0.3% in the first quarter, compared to an increase of 3.2% in the previous quarter.

Knight Frank Singapore research director Leonard Tay believes the CCR price index will be higher when final figures are released on April 23.

This is due to the rapid unit growth in GuocoLand’s 558-unit Midtown Modern condominium in Bugis, which sold around 340 units or 61% when it launched earlier this month, he said.

Prices in the CCR have not risen as quickly over the past year due to a lack of new launches in this region, as well as travel restrictions which are dampening the interest of foreign investors. But Singapore’s attractiveness among the world’s wealthy mobile as well as Asian family offices will attract overseas buyers to new CCR launches such as The Atelier and Irwell Hill Residences, ”said Mr. Tay.

According to URA data downloaded Thursday, 43.1% of non-real estate private home sales in the first quarter came from 2,527 units on the outskirts of town, while 20% were luxury homes in the CCR and 36.9% were mass market houses. in the suburbs.

With foreign demand for home purchases already constrained by travel restrictions, a new round of cooling measures, which will likely include an increase in stamp duties, could further dampen demand from this group, Tay said.

Meanwhile, property prices climbed 5.6% in the first quarter, reversing from a 1.6% decline in the previous quarter.

This is largely due to the interest in Good Class Bungalows (GCBs) from very wealthy individuals, especially those who have converted to Singaporean citizens, Tay said.

According to Knight Frank’s 2021 Wealth Report, the number of people with a net worth of US $ 30 million, including their primary residence, increased 10.2% in 2020 from the previous year despite the recession.

“With the supply of landed homes unlikely to increase significantly, these homes have become the new blue chip,” Tay said.

Flash estimates are compiled based on transaction prices shown in contracts subject to stamp duty payment and data on units sold by developers through mid-December. The stats will be updated on April 23 when the URA releases its full set of real estate statistics for the first quarter.

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