October 28, 2022
SINGAPORE, 28 October 2022 – The private residential and HDB resale segments chalked up another quarter of price gain in Q3 2022, marking 10 consecutive quarters of growth - riding out the pandemic and macroeconomic uncertainties along the way. Figures from the Urban Redevelopment Authority (URA) and the Housing and Development Board (HDB) showed that the momentum in price growth has not let up from Q2 to Q3 2022. Of note, prices of non-landed mass market private homes have shot up to a 13-year high, as new launches achieved benchmark prices during the quarter.
Overall private home prices increased by 3.8% QOQ in Q3 2022, building on the 3.5% growth in Q2 2022. The final print released today was also higher than the flash estimate published earlier this month. In the first nine months of 2022, private home prices have climbed by 8.2% from the end of 2021, and could post an overall price increase of 9% to 10% for the full-year 2022 by PropNex’s forecast.
The price growth in Q3 2022 was led by the Non-landed private home segment, where home values rose by 4.4%, following the 3.6% increase in the previous quarter. Meanwhile, in the Landed homes segment, the price growth slowed from 2.9% QOQ in Q2 to 1.6% QOQ in Q3 2022, owing to the weaker sales volume of landed properties during the quarter.
Within the non-landed homes segment, the Outside Central Region (OCR) led the charge with a 7.5% QOQ price increase in Q3 2022 – the strongest quarterly price growth since Q3 2009 where prices surged by 16.1%. The price increase in Q3 2022 was driven partly by the three new launches – AMO Residence, Lentor Modern, and Sky Eden@Bedok – which achieved robust sales at benchmark prices which averaged at over $2,100 psf. In addition, URA Realis caveat data also showed that several existing launches on the market have sold units at higher average prices in Q3 over the previous quarter amid the dwindling stock of new homes in this sub-market. In the 9M 2022, OCR non-landed home prices have risen by 12.2% from end-2021.
In the Rest of Central Region (RCR), non-landed home prices rose by 2.8% QOQ in Q3 2022, moderating from the 6.4% QOQ growth in the previous quarter due to a lack of fresh project launches in the RCR in Q3. Some of the projects that garnered higher average transacted unit prices in Q3 2022 included CanningHill Piers, Riviere, Meyer Mansion and One Pearl Bank. In particular, Riviere was the best-selling new launch in the RCR, shifting 70 units at an average price of $2,890 psf during the quarter. In the 9M 2022, RCR non-landed home prices increased by 6.4% from end-2021.
Meanwhile, the Core Central Region (CCR) continued to see gradual price recovery. Prices of non-landed CCR homes climbed by 2.3% QOQ in Q3 2022, up from the 1.9% growth in the previous quarter. The best-selling CCR new projects in Q3 were: Hyll on Holland which sold 71 units at an average price of $2,687 psf (Q2: 37 units, $2,670 psf); Perfect Ten which transacted 65 units at an average price of $2,956 psf (Q2: 37 units, $2,898 psf), and Leedon Green which moved 64 units at an average price of $2,813 psf (Q2: 49 units, $2,783 psf). In the 9M 2022, CCR non-landed home prices increased by 4.1% from end-2021.
In the EC market, just 28 new units were transacted in Q3 2022 – markedly lower from 193 units in the previous quarter – given the dearth of new EC launches. North Gaia in Yishun drove sales in Q3, selling 19 units at an average price of $1,272 psf, according to caveats lodged.
All in, developers launched 1,455 new units (ex. ECs) and sold 2,187 new private homes (ex. ECs) in Q3 2022. In 9M 2022, new private home sales totalled 6,409 units (ex. ECs). Meanwhile, overall private resale transactions declined to 3,719 units in Q3 2022 from 4,236 in the previous quarter – taking overall resale volume to 11,332 units in 9M 2022. PropNex projects that 14,500 to 15,000 units may be transacted in the private resale market in 2022.
Ismail Gafoor, CEO of PropNex Realty:
“The private residential market has demonstrated remarkable resilience, weathering the Covid-19 pandemic, growing uncertainties, and the cooling measures in December 2021. Private home prices have been on a general uptrend and housing demand continues to be stable. Recently, the government introduced more cooling measures amid rising interest rates to prevent home buyers from overstretching themselves – measures which are needful and timely, in our view.
In Q3, the OCR was unsurprisingly, the star performer, posting higher sales volume and stronger price growth, mainly spurred by the new launches AMO Residence, Sky Eden@Bedok and Lentor Modern which were put on the market in July and September. The uplift in OCR home values in Q3 had narrowed the non-landed new sale average unit price gap between the sub-market and the CCR and RCR to 38% and 19%, respectively – down from 55% and 28% in Q2 2022.
We think many buyers have observed the narrowing price gaps and started to consider properties in the CCR and RCR, where budget permits. Apart from three OCR launches which topped sales in Q3, the other popular projects that followed were in the CCR and RCR, such as Hyll on Holland, Riviere, Leedon Green, and Perfect Ten.
Foreigners remain keen on Singapore residential properties as a way to preserve wealth amid the stronger SGD currency and rising inflation. Based on URA Realis caveats, foreign buyers collectively accounted for about 12% of non-landed new home sales in the CCR and RCR in Q3 – up from 9% in the previous quarter and 6% in Q1 2022.
With the tight unsold stock of new private homes (15,677 units ex. ECs as at Q3 2022) and limited new launches in Q4 2022, we expect private home prices to likely rise at a slower pace and private new home sales coming in at around 8,000 to 8,500 units (ex. ECs) for the whole of 2022. The EC segment will be in the spotlight in Q4 2022; the recently launched Copen Grand EC sold 73% of its units at an average price of $1,300 psf and Tenet EC in Tampines is expected to be opened for preview in November.
In the private residential resale market, transaction volume will likely remain muted given the tight resale inventory. Owners may be reluctant to sell, opting instead to tap the strong rental demand in a landlord’s market – the increase in rents may also help to defray any increase in monthly mortgage payments due to rising interest rates. Rentals of private homes rose by 8.6% QOQ in Q3 2022 – up from the 6.7% growth in the previous quarter – and could continue to rise owing to strong demand. In 9M 2022, rentals have climbed by 20.8% from the end of 2021. Meanwhile, private home owners looking to downgrade to HDB resale flats may also now hold back on the sale of their private home as a result of the newly imposed 15-month wait-out period, further crimping available resale stock.”
Figures released by the Housing and Development Board (HDB) showed that resale flat prices rose by 2.6% QOQ in Q3 2022, following the 2.8% QOQ gain in the previous quarter. The increase came amid a 10.7% growth in resale volume from 6,819 flats in Q2 2022 to 7,546 flats in Q3 2022. In the first nine months of the year, HDB resale prices have now risen by about 8% from end-2021 and total resale HDB flat transactions came up to 21,299 units.
Wong Siew Ying, Head of Research and Content, PropNex Realty:
“The strong HDB resale market and upward pressure on prices amid rising interest rates prompted the government to introduce several calibrated measures targeted at the public housing segment from September 30. These measures may help to rein in the pace of price growth going forward as they will affect the loan quantum for buyers taking an HDB loan, as well as delaying cash-rich private home downgraders from entering the HDB resale market. For the whole of 2022, we project HDB resale prices could rise by 9% to 10% - still healthy, albeit slower than the 12.7% increase posted in 2021.
In Q3 2022, the median price of 3-, 4- and 5-room resale flats all rose: 3-room flat at $370,000 (+0.5% QOQ); 4-room flat at $520,000 (+2.0% QOQ); and 5-room flat at $630,000 (+3.3% QOQ).
Resale volume rebounded in Q3 2022, taking the total HDB resale flats sold to 21,299 units in 9M 2022. We expect demand for HDB resale flats to remain resilient and the total transaction volume will likely exceed 28,000 units for the entire 2022. It bears watching if the 15-month wait-out period will dent sales of 5-room and larger resale flats substantially and the extent to which demand for smaller flats may be boosted by seniors who are downgrading from their private home.
Market observations suggest that the stock of HDB flats available for resale remains tight and should help to support resale flat prices. Although a bumper crop of more than 31,000 flats are estimated to exit the 5-year minimum occupation period this year, some owners may opt to stay put in view of the firm private home prices and high replacement cost of buying a residential property in today’s market.
Meanwhile, some flat owners may choose to rent out their HDB flats as HDB rentals continue to strengthen amid healthy leasing demand. There will likely be more upside ahead for the HDB rental market as those affected by the 15-month wait-out period may wish to rent in the interim as well as demand from HDB upgraders, who have sold their flats first before purchasing a private home to avoid having to pay the additional buyer’s stamp duty (ABSD).”
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