The price gap between private and public housing widened in the first quarter. While resale prices dipped 0.8 per cent for Housing Board flats - the sixth consecutive quarter of decline - private home values climbed 3.9 per cent.
This easily beat a flash estimate of 3.1 per cent growth, and marks the steepest quarter-on-quarter gain in the private sector since the second quarter of 2010, when the Urban Redevelopment Authority index gained 5.3 per cent.
Ms Christine Sun, head of research at OrangeTee and Tie, said the price divergence stemmed from an oversupplied HDB market while the amount of completed homes remained low in the private market. Some projects raised prices as well.
Non-landed homes led the way this quarter with a 4.4 per cent price increase compared with a 0.8 per cent rise in the fourth quarter.
Landed property prices rose 1.9 per cent compared with 0.5 per cent increase in the final three months of last year.
Non-landed homes in the outside central region outperformed the rest with 5.6 per cent in gains, compared with the 0.8 per cent increase in the previous quarter.
Prices in the core central region were up by 5.5 per cent in the quarter compared with a 1.4 per cent lift in the fourth quarter of 2017.
City fringe increased 1.2 per cent, higher than the 0.4 per cent growth in the previous quarter.
The vacancy rate for completed private homes fell by 0.4 percentage points to 7.4 per cent.
Dr 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 chief executive Ismail Gafoor added: "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 rents remained unchanged after a 1.3 per cent decrease in the fourth quarter. But rent for non-landed property increased 0.3 per cent compared with the 0.8 per cent decrease in the fourth quarter.
Mr Nicholas Mak, executive director of ZACD Group, said the en-bloc market could be pushing private residential property rents into recovery since residents, including tenants, would have to find alternative housing when a development is sold.
There were also fewer options in the secondary market as more sellers were holding out for a collective sale, said Dr Lee.
There were 44,261 units in the pipeline with planning approvals as at March 31, including executive condominium units, while there were 24,193 unsold units in the pipeline - the highest since the third quarter of 2016.
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."
But Dr Lee believes 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 between 2009 and 2013, he thinks this upcoming supply can be absorbed.
Adapted from The Straits Times, 28 Apr 2018.