January 03, 2022
03 January 2022, SINGAPORE – Private home prices and HDB resale prices hit new highs in 2021, posting growth over consecutive quarters, as recovery optimism, low interest rates and excess liquidity catalysed strong housing demand across the board – new launches, private resale, and HDB resale flats - among Singaporeans. With new cooling measures in place from 16 December 2021, home prices are expected to rise at a more measured and sustainable pace in 2022.
The flash estimate from the Urban Redevelopment Authority (URA) showed that overall private home prices rose for the seventh straight quarter in Q4 2021, climbing by 5% QOQ – a sharp increase from the 1.1% QOQ increase in the previous quarter. The is the fastest pace of price increase on a quarterly basis since Q2 2010 where private home values rose by 5.3% QOQ.
Based on the flash estimate, overall private home prices increased by 10.6% in 2021, marking the highest pace of annual price increase since values rose by 17.6% in 2010. With a PPI flash estimate index reading of 173.6 in Q4 2021, the overall private home prices have hit yet another new peak.
Prices across all segments grew in the last quarter of 2021. The price growth in Q4 2021 was led by the non-landed private homes segment, which jumped by 5.4% QOQ. This came on the back of firm private resale prices and several new launches in the central region - such as Jervois Mansion, CanningHill Piers, and Perfect 10 – which had higher benchmark prices, boosting overall home values.
Within the non-landed homes segment, prices in the Rest of Central Region (RCR) expanded the most, growing by 7.3% QOQ in Q4 2021, boosted by the new home sales in the region particularly CanningHill Piers which launched in November 2021. Private home prices in the Outside Central Region (OCR) grew by an impressive 5.4% QOQ, with mass market homes launched in Q4 including The Commodore being well-received.
Meanwhile, home values in the Core Central Region (CCR) grew 2.5% QOQ in Q4 2021 – it is the highest pace of quarterly increase posted in the CCR over the whole of 2021 - supported by new launches as well as the opening of Vaccinated Travel Lanes (VTLs) during the quarter, which had possibly facilitated sales in the CCR from foreigners.
Landed home prices rose by 3.7% QOQ in Q4 2021, despite the lower transaction volume and fewer big-ticket sales of Good Class Bungalows, which had helped to support prices in the previous quarters. For the whole of 2021, landed home prices had gone up by 13.1% based on the flash estimate.
“The Q4 2021 price increase was stronger than expected, driven by a number of new launches with firmer launch prices in the CCR and RCR – in particular, CanningHill Piers in Clarke Quay emerged as the best-selling project in the quarter, shifting 582 units at an average price of $2,937 psf; while Jervois Mansion sold 101 units at an average price of $2,578 psf, according to Realis caveats lodged. In addition, previously launched central region projects such as Normanton Park, The Avenir, and Leedon Green also continued to perform well in Q4 2021.
In hindsight, seeing the robust price increase in the last quarter and overall in 2021, we think the government’s move to introduce the new cooling measures on 16 December was a timely one, which will put the brakes on what could be a fast-accelerating price growth.
Supported by the good take-up at centrally-located projects, the average transacted price by quantum for overall non-landed new private homes (ex. ECs) rose by about 22% QOQ to $2.1 million in Q4 2021, while that of non-landed resale private homes inched up by 2% QOQ to $1.7 million amid slower resales during the quarter. We believe the Covid-19 safe management measures (SMM) for Stabilisation Phase likely affected home viewing and resale activity in Q4.
For the whole of 2021, overall private home prices have risen by a strong 10.6% based on the flash estimate. We expect the pace of growth may ease to 3% to 5% in 2022 as new cooling measures weigh on investment demand and ensure prices – especially that of prime city homes - move in a more sustainable manner. Barring the CCR which is more investor-reliant, prices in other housing segments such as the RCR, OCR, EC and resale markets should remain fairly resilient owing to genuine demand from upgraders and local buyers, limited stock of unsold mass market homes, and in the case of ECs, their more affordable pricing and limited supply. Singaporeans continued to form the bulk of private housing demand in Q4 2021, accounting for 82% of non-landed private new sales and 79% of non-landed private resale transactions during the quarter.
Based on the Realis data, over 2,900 new private homes and more than 3,900 private resale residential units changed hands in Q4 2021. For the full year 2021, we anticipate that new home sales could hit 13,000 units while private resale volume may reach 19,000 units. We project that the transactions may taper to 9,000 to 10,000 for private new home sales and 15,000 to 16,000 for resale properties in 2022.”
The flash estimate released by the Housing and Development Board (HDB) showed that resale prices of public housing flats rose by 3.2% QOQ in Q4 2021. With an index reading of 155.4 in Q4 2021, the HDB resale price index has scaled another new high. For the whole of 2021, HDB resale prices jumped by 12.5% - the highest annual growth since 2011 where resale flat values rose by 10.7%.
Based on the flash estimate, HDB resale prices have hit a 10-year high on annual terms, rising by 12.5% in the full-year 2021. This strong run up in prices had perhaps given many HDB flat owners some cheer after witnessing the fall in resale flat values for six straight years from 2013 to 2018. However, such double-digit price growth is unsustainable over the long term. Amid the rising market, we note that a record 255 flats have been resold for at least $1 million in 2021.
We expect the pace of HDB resale price growth to slow to between 6% and 8% in 2022 as the new cooling measures are likely to temper the buoyant sentiment in the market. In addition, the HDB will also ramp up the supply of new Build-to-Order (BTO) flats over the next two years to provide more options for home buyers.
Nevertheless, we are still expecting the HDB resale demand to remain healthy as resale flat buyers – many are Singaporean first-time home buyers or upgraders – are least affected by the new property curbs.
While the ramp up in BTO supply will give Singaporeans more opportunities at securing public housing, it may not cool the hot demand for HDB resale flats entirely because the factors that drove demand in 2021 may continue to persist. These include construction delays and extended waiting time for BTO completions, as well as the tight supply of new mass market private homes and firm prices in the OCR, causing buyers to turn to the HDB resale market.
Based on preliminary sales data, 7,388 HDB flats were resold in Q4 2021 – down by about 12% from 8,433 units transacted in the previous quarter. The decline is likely due to the Stabilisation Phase of the SMM affecting viewings and sales, and the typically slower market activity towards the end of the year. In 2021, more than 30,000 flats were resold, close to PropNex’s forecast of 30,000 units. We retain our projection of 30,000 HDB resale transactions for 2022 in anticipation of healthy underlying demand for resale flats and the bumper stock of flats that are due to exit the 5-year Minimum Occupation Period in 2022.”
December 23, 2021