Private home prices have recorded their first quarterly increase since property cooling measures were introduced last July, according to data out yesterday. Values rebounded 1.5 % in the second quarter over the same period last year, following a 0.7 % decline in the first quarter.
The increase was driven in part by more expensive land costs, which in turn translated to higher launch prices, particularly in the city fringe area. This zone, often called the rest of central region, was the standout, with a 3.5 % quarter-on-quarter rise in prices.
The suburbs or outside central region edged up 0.4 % to follow a 0.2 % lift in the first quarter. Prime areas - known as the core central region - saw price rises of 2.3 %, a stark turnaround from the 3 % decline in the first quarter, according to Urban Redevelopment Authority (URA) figures yesterday.
Mr Ong Teck Hui, JLL's senior director of research and consultancy, cited progressive sales from earlier luxury launches. Boulevard 88 sold 37 units in the second quarter at a median price of $3,665 per sqft, while 3 Cuscaden moved 26 units at $3,575 psf.
The recent turmoil in Hong Kong and uncertainty in Britain could bode well for the residential market here, as high-net-worth individuals eye wealth centres, including Singapore. "This is evidenced by an increase in foreigners buying non-landed properties above $4 million post-cooling measures. The inflow of funds could eventually lead to property investments here," said Ms Christine Li, Cushman & Wakefield's head of research, Singapore and South-east Asia.
Mr Ong cited strong pricing at Amber Park on the city fringes, with 156 units sold at a median price of $2,476 psf, while Sky Everton shifted 131 units at $2,524 psf.
"In 2017 and the first half of 2018, many of the en bloc sales were transacted in the (city fringes) at increasing land prices. As a result, strata units in new projects were also launched at relatively higher prices," said ERA Realty key executive officer Eugene Lim.
Sales were also driven by location, tenure and higher incentives for agents, noted CBRE's associate director of research Catherine He. Overall private home values rose by 0.8 % in the first half of this year and are now 2.5 % below the peak in the third quarter of 2013, noted Ms Tricia Song, head of research for Singapore at Colliers International.
But she does not believe this price growth is sustainable as buyers remain value conscious while trade tensions and other concerns have cast a pall over Singapore's economic outlook. "Developers would be mindful of these factors in pricing their units," she added.
Meanwhile, prices of landed properties dipped 0.1 % in the second quarter, compared with a 1.1 % increase in the first. URA data also showed that rents of private homes rose 1.3 % in the second quarter, up from 1 % in the first, while vacancy rates edged up 0.1 percentage points to 6.4 %.
Developers launched 2,502 new private homes - excluding executive condominiums - for sale in the second quarter and sold 2,350, a 93.9 % take-up rate compared with 61.5 % in the first quarter, Mr Ong noted. In the resale market, there were 4,321 units sold in the first half this year, 49.6 % fewer than in the same period last year, he noted.
Analysts say the market performance in the second half of this year will depend on the magnitude of the economic slowdown and how sentiments are affected.
Adapted From The Straits Times, July 27 2019