Singapore’s hunger for more high-end housing drove up prices for private residences by 3.4 percent from July through September as the market posted its tenth consecutive quarter of growth with demand persisting in the face of soaring interest rates.
A government price index of private residential properties jumped to 187.1 in the July-September period from 180.9 in the preceding three months, with the most recent quarter’s 3.4 percent growth showing only a slight deceleration from the 3.5 percent level set in the preceding three months, flash estimates from the city-state’s Urban Redevelopment Authority showed on Monday.
Year on year, home prices grew at an accelerated clip of 13.2 percent last quarter from the 10.6 percent rise in the April through June period, and analysts do not expect the market to fall, even after the government last week announced a new round of cooling measures to help calm the sector.
“We believe the cooling measures will ensure that private home prices remain stable, acting as speed bumps to put the brakes on the pace of growth we have seen so far,” said Ismail Gafoor, chief executive of PropNex Realty. “However, we are not anticipating a sharp downward correction in prices as developers do not have that much room to reduce price, in view of the higher construction cost [and] the high land cost for some sites.”
Suburban Price Explosion
A breakdown of the URA figures shows that growth in the most recent quarter was driven by the condo segment, where prices rose by 4.1 percent from the previous three months. This figure outpaced the 1.2 percent quarterly uptick recorded by landed residences such as bungalows, shophouses and strata landed housing.
By geography, housing costs in the suburban locations classified as outside the central region (OCR) posted the highest quarterly jump of seven percent during the period – a marked increase from the 2.1 percent growth in the April through June period.
Gafoor said the successful launches of three projects in the OCR during the third quarter helped boost home prices in the region as the trio of developments achieved average selling prices of around S$2,100 per square foot – exceeding the emerging median price in the OCR at S$2,000 per square foot or higher.
UOL, Singapore Land and Kheng Leong posted a 98 percent take-up for their joint AMO Residence project in Ang Mo Kio in July, while at least three-quarters of all units at Frasers Property’s Sky Eden@Bedok in Bedok Central and GuocoLand’s Lentor Modern in the Thomson area changed hands last month.
“Based on our observations from recent OCR launches, the demand far outstrips the number of available units; therefore, should some would-be buyers decide to drop out due to the fresh measures, there are other interested buyers to take their place,” he added.
Price growth in the core central region (CCR), which includes locations in the heart of Singapore including Raffles Place, Marina Bay and Tanjong Pagar, went up by 2.3 percent last quarter following a 1.9 percent uptick in the preceding three months.
Prices fell sharply in city fringe locations or what the URA refers to as the rest of the central region (RCR), where tariffs grew by just 2.5 percent in the third quarter after climbing by 6.4 percent in the previous three months.
Gafoor said the limited volume of new projects launched in these areas tempered price growth as secondary sales made up a larger slice of the market, with Piccadilly Grand near Little India and Liv @ MB in Mountbatten the only two projects introduced in the region over the past three months.
Knight Frank Singapore research head Leonard Tay said the strong reception for projects in the suburbs and city fringe locations during the third quarter showed the enduring strength of housing demand with homebuyers having already shaken off the earlier round of market curbs imposed last December, and remaining unfazed by inflation, recession fears and higher interest rates.
The URA will release the fully monthly home sales data for September on 15 October.
Double-Digit Growth in 2022
In the nine months through September, Singapore home prices have surged by 7.8 percent year on year with analysts projecting a full-year increase of from 8 to 10 percent – slightly slower than the 10.6 percent jump recorded last year.
Price growth will likely slow in the fourth quarter, according to Wong Xian Yang, research head for Singapore at Cushman & Wakefield, as the cooling measures rolled out last week September take effect while broader macroeconomic factors continue to weigh on sentiment.
“The Q3 2022 jump in OCR new sales prices is expected to be one-off, with the aforementioned OCR projects largely sold out,” Wong said. “We remain sanguine that prices could remain stable, albeit growth momentum is expected to slow significantly, given strong underlying property demand and low unemployment levels.”
Gafoor pegs price growth for this year at between 8 percent and 9 percent, while predicting that at least 8,000 units will have been sold compared to more than 10,000 units changing hands in 2021. Knight Frank’s Tay raised his 2022 growth forecast to 10 percent from a 5 to 7 percent prediction made in July.
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