3 major catalysts that spurred Singapore private home sales and prices

Overall private home values rose 6.2% over the past year.

A bounce back in confidence on gradual economic recovery and the vaccine rollout, the availability of ample liquidity, as well as healthy housing demand have helped to spur home values in Q1 2021, says PropNex. In addition, market sentiment has improved as reflected by the strong take-up of new project launches that are attractively-priced and well-located. The low interest rate environment also strengthened buying power and supported home financing.

The flash estimate from the Urban Redevelopment Authority (URA) showed that overall private home prices rose by 2.9% in Q1 2021 – representing the fourth straight quarter of price growth.  

According to PropNex, the price increase in Q1 2021 was led by the landed private residential property segment which saw home values climb by 5.6% during the quarter. Meanwhile, non-landed private home prices rose by 2.1%, according to the flash estimate. Within the non-landed property segment, home prices in the Rest of Central Region (RCR) posted the strongest growth at 6.1%, while the Outside Central Region (OCR) recorded a 0.9% price gain. In contrast, home values in the Core Central Region (CCR) dipped by 0.3% from Q4 2020 to Q1 2021. 

Ismail Gafoor, CEO of PropNex, notes:

The performance of the private residential market exceeded expectations in 2020 and the main drivers that have spurred sales and supported prices last year continued to propel the market in Q1 2021. Specifically, the ample liquidity in the market, low interest rates, and rising optimism remain the key catalysts for sales, which helped to support prices.

The estimated 2.9% increase in private home prices in Q1 2021 was unsurprising, given the healthy demand across the new home sale and resale markets. Factoring the latest flash estimate, overall private home values have risen by 6.2% over the past year, with the bulk of the increase taking place in Q4 2020 and Q1 2021 – where prices collectively increased by about 5.1% over the two quarters.

Looking back, when the government intervened with fresh cooling measures in July 2018, it noted that prices rose sharply by about 9% over the preceding four quarters and that demand had recovered strongly. While prices have not risen as much this time, the pace of price growth, particularly in the last two quarters will certainly draw the government’s attention and may heighten the risk of new cooling measures being introduced down the road. We believe the final pricing data for Q1 and Q2 this year will be closely watched and a stronger pick-up in home values could likely trigger new measures to keep prices in check. 

In Q1 2021, new launches that were priced sensitively were well-received, as seen by the robust take-up at some projects, such as Normanton Park, The Reef At King’s Dock, Parc Central Residences EC, and more recently at Midtown Modern. Quantum play will remain a key pricing strategy for developers in driving sales momentum. Based on caveats lodged, the average price quantum of non-landed new homes sold between January and end-March 2021 was about $1.6 million, fairly in line with that of Q4 2020. Such a price point is still relatively attractive to many buyers and investors. Meanwhile, over in the private residential resale market, we observe that resale prices have crept up in recent months, driven by the strong demand and also perhaps taking a cue from the firm prices in the new launch segment and the recovery in HDB resale prices.

For 2021, we project that overall private home values may potentially increase by 5% to 6%, supported by new launches – many of them located in the CCR and RCR – as well as the dwindling unsold inventory in the market. However, we remain watchful of any pre-emptive moves on the government’s part to tame further price increase in the private residential market.