ANALYSTS continue to harbour bullish outlook on the private residential market, following a 3.9 per cent increase in prices in Q1, but are keeping an eye on the pace of launches that may come onstream, given the huge supply pipeline.
They are, however, split on whether there is enough demand to soak up the impending supply boom.
An estimated 40,300 uncompleted units with planning approvals, excluding executive condominiums (ECs), were in the pipeline as of end-Q1. The figure was 36,029 in the previous quarter.
Of the 40,300, 23,514 remained unsold, up from 18,891 in the previous quarter. (see amendment note)
On top of that, URA said that there is a potential supply of 20,100 units, including ECs, from Government Land Sales (GLS) and awarded en bloc sites that have not been granted planning approval yet.
But many analysts say the market would likely be able to support the upcoming units.
Huttons Asia's Lee Sze Teck said: "Given the pent-up demand in the market in the past few years, it's likely that buyers will absorb the upcoming supply in the pipeline."
Colliers International's head of research in Singapore Tricia Song pointed to "easing supply" in the next few years: with another 7,931 units excluding ECs in the pipeline for completion in the rest of 2018, the figure is sharply down from the 16,449 units completed in 2017.
There are 8,060 units in the pipeline to be completed in 2019, and 3,330 in 2020.
She added that while there could be a potential glut ahead, it would take some time for new projects from the collective sales frenzy to even be launched for sale, let alone be completed.
But Nicholas Mak, executive director of ZACD Group, warned: "The market may not be able to absorb the supply, especially if the new projects are launched at higher prices."
He said higher prices might already have resulted in slower sales, observing that this quarter, developers launched 921 units excluding ECs, higher than the quarter ago's 877 units, but sold 1,581 such units compared to the quarter ago's 1,864.
Some analysts predicted double-digit growth for private home prices this year, after prices clocked a 3.9 per cent jump this quarter, beating the flash estimate of 3.1 per cent. This was the steepest quarter-on-quarter gain since Q2 2010, when the index gained 5.3 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."
Mr Lee of Huttons Asia said the en bloc boom has led to more property owners buying replacement homes, and for sellers to raise their asking prices.
Non-landed home prices led the way in Q1, with a 4.4 per cent increase, compared with the preceding 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) suburban homes outperformed the rest by posting 5.6 per cent in gains, compared to the 0.8 per cent increase in the previous quarter.
JLL's national director for research and consultancy Ong Teck Hui said what helped was strong pricing in new projects with high transaction volumes, such as The Tapestry's median price of S$1,408 per sq ft (psf) and Parc Botannia at a median $1,283 psf.
"Developers also raised prices with confidence" in the Core Central Region (CCR), where prices rose 5.5 per cent over the previous quarter, said Ms Song of Colliers International.
Vacancy for the quarter fell by 0.4 percentage point to 7.4 per cent.
Dr Lee of ET & Co predicted the price index will rise by 8 to 12 per cent for the whole of 2018.
Others were more bullish. For instance, Mr Mak said prices could increase 10 to 17 per cent for the entire year, as developers face cost pressure from rising land prices for GLS residential land tenders and collective sales in the past year.
Meanwhile, Ms Song of Colliers International predicted private home prices to rise by 8 per cent for the full year.
"We think the increase is front-loaded due to the pent-up demand and buyers' fear of missing out on good-value buys as prices trend up," she said.
Amendment note: It was incorrectly mentioned in the fourth paragraph that ‘of the 40,300, 23,154 remained un-sold, up from 18,891 in the previous quarter’. The correct figure should be 23,514 instead.
Adapted from The Business Times, 28 Apr 2018.