October 22, 2021
22 OCTOBER 2021, SINGAPORE – Home prices continued to climb in Q3 2021, amid the tighter COVID-19 safe management measures under the Phase 2 Heightened Alert (P2HA) in July and August. The healthy sales volumes – in particular, the HDB resale market and private landed homes – have helped to support prices during the quarter. The resiliency in prices is as expected with the strong demand for resale and new homes in the suburbs.
Data from the Urban Redevelopment Authority (URA) showed that overall private home prices rose for the sixth consecutive quarter in Q3 2021, rising by 1.1% QOQ – improving slightly from the muted growth of 0.8% growth in Q2 2021. On a year-on-year basis, the overall home prices grew by 7.5% in Q3 2021. In the first nine months of 2021, overall private home prices have risen by 5.3%. For the full year 2021, PropNex projects that private home prices could rise by 6% to 7%, supported by the growing economy and resilient demand from homebuyers.
The price increase last quarter was led by the landed home segment, where prices moved up by 2.6% QOQ, a bounce back from the contraction of -0.3% in the previous quarter. In the third quarter of 2021, a number of record-beating sales of Good Class Bungalows (GCBs) as well as increasing demand for landed homes helped to pushed up overall landed home values.
Meanwhile, non-landed private home prices saw values inch up by 0.7% QOQ, a slight improvement from the flash estimate figures. Within the non-landed homes segment, prices in the Rest of Central Region (RCR) booked the steepest QOQ increase among the sub-markets, growing by 2.6%. This is followed by the Core Central Region (CCR) and the Outside Central Region (OCR) which shrunk by -0.5% and -0.1% respectively.
In terms of transaction volumes, 3,550 new homes (excluding ECs) were sold in Q3 2021 - up by 19.7% from Q2 2021, and up by 0.9% from the 3,517 new homes sold in Q3 2020. Meanwhile, 717 new ECs were transacted in Q3 2021, 44.8% more than the 495 units sold in Q2 2021.
The resale segment did exceptionally well in Q3 2021, with 5,362 units changing hands. This is one of the highest quarterly resale figures over the past 10 years. The last time the resale volumes exceeded 5,000 units was in Q2 2010 where over 5,200 units were sold in the resale market. For the first nine months of 2021 new home sales volume (10,009 units) and the resale volume (15,214 units) have surpassed 2020’s total volumes.
Developers launched slightly fewer new homes for sale in Q3 2021 at 2,149 units (ex. ECs) – 8.8% lower than the 2,356 units put on the market in Q2 2021. For ECs, 496 units were launched for sale in Q3 2021, up by 20.1% QoQ from the 413 units launched in Q2 2021.
Mr Ismail Gafoor, CEO of PropNex Realty:
“The private residential market, in particular the suburban new home sales market and resale market enjoyed high sales volumes as well as increasing prices in Q3 2021 despite the re-tightening of pandemic measures in July to August during the Phase 2 Heightened Alert (P2HA).
In the third quarter, owing to a few major OCR launches namely, Pasir Ris 8, as well as rising land bids from recent GLS tender activities, it set off a flurry of buying activity in the OCR market. The exuberant buying activity on top of the depleting inventory of existing project launches in the OCR had resulted in a spill over effect to other RCR project launches and resale homes in the outlying areas.
The increased portion of OCR home sales during the quarter may have exerted some drag on the basket of prices. 56% of private homes sold (both new home sales and resales) during the 3rd quarter of 2021, were OCR homes. In comparison to the 2nd quarter and 1st quarter of 2021, where OCR homes comprised of only 46.9% and 42.5% of total home sales.
Our observations suggest that buyers’ confidence remains generally intact, buoyed by the economic recovery, the low interest rate environment and excess liquidity in the market. For the last quarter of 2021, home sales may be slightly muted due to the restrictions under the ‘Stabilization Phase’ which may impact viewings, as well as the festivities during the year end.
Nonetheless, we are projecting new home sales volumes to achieve close to 13,000 (ex. ECs) units, representing more than 30% increase from 9,982 units last year. Whereas for the resale market, we forecast over 19,000 homes to be resold in 2021 – more than 77% increase up from 10,729 resale properties transacted in 2020, barring any unforeseen events.
For the full-year 2021, we project that overall private home prices may rise by 6% to 7%, boosted by the economic recovery, positive market sentiment and upcoming launches in the central region. In addition, the dwindling unsold stock – at 17,140 units as at the end of Q3 2021 – may also keep prices growing given the limited supply. Of note, the unsold stock in the OCR has fallen below 5,000 units, at 4,382 units, as of the end of Q3 2021.
Based on the caveats lodged, Singaporeans continue to account for the majority of new non-landed private home sales in Q3 2021, making up about 85.3% of the total new sales in the quarter – up from the 82.2% in Q1 2021. Meanwhile, the proportion of new non-landed private homes purchased by foreigners inched down to 4.1% in Q3 2021 from 4.5% in the previous quarter. Demand from foreigners may increase in the coming months due to the opening of international borders and the upcoming central region launches in Q4.”
Data released by the Housing and Development Board (HDB) showed that resale prices of public housing flats rose by 2.9% QOQ in Q3 2021, following the 3% QoQ increase in the previous quarter. On a YoY basis, HDB resale values rose by 12.5% in Q3 2021. With an index reading of 150.6 in Q3 2021, the HDB resale price index has now achieved a new high, surpassing the recent peak in Q2 2013 which had an index reading of 149.4.
Mr Ismail Gafoor, CEO of PropNex Realty:
“The long waiting times of new Build-to-Order flats and construction delays have helped to drive up HDB resale prices higher in recent quarters. The 2.9% increase achieved in Q3 2021 is a remarkable continuation from the previous quarter’s growth. On a year-on-year basis, HDB resale prices have continued its double-digit growth from Q2 2021, rising by 12.5% in Q3 2021 - which is the highest YOY growth since Q3 2011 which achieved a YOY growth of 11.6%.
More than 8,400 resale flats have been sold in Q3 2021, one of the highest quarterly resale transaction volume recorded over the past 10 years. The last time the HDB resale volume surpassed the 8,000-unit mark was in Q3 2010, where over 8,200 units were sold. More buyers including new families and young couples continue to flock to the resale market – many being concerned and cautious over whether to apply for a BTO amid troubles plaguing the construction industry.
The resale market may continue to see this trend of 7,000 to 8,000 units being sold in the next few quarters. While HDB is stepping up to increase flat supply, more action may be required in order to address homebuyers’ concerns over construction delays. Despite the introduction and extension of the ‘Stabilization phase’ restrictions from 27 September to 23 November which may have an impact on property viewings, we expect the HDB resale volume for Q4 2021 to likely achieve resale levels seen in Q3 2021. We project that sales could exceed 30,000 flats for 2021 - up by more than 20% from the 24,748 flats resold in 2020.
Strong demand for resale flats will likely continue to support HDB resale prices for the rest of the year till 2022. In the first nine months of 2021, HDB resale prices have climbed by about 8.9%. PropNex expects HDB resale values to grow by 11% to 12% for the whole of 2021. As HDB resale prices continue to trend up, more flat owners may be motivated to sell their flat and recycle the capital to upgrade to a new home such as a larger resale flat or private property.”
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