The Business Times, 27 Jan 2023, Fri 9:30 PM
By Corinne Kerk
IN THE face of a looming global recession, a fresh round of cooling measures, a high-interest-rate environment and lack of launches, private home prices in Singapore inched up 0.4 per cent in the fourth quarter of 2022.
This was slightly higher than the 0.2 per cent flash estimate by the Urban Redevelopment Authority (URA) earlier this month, and follows an increase of 3.8 per cent in the previous quarter. It also represents the lowest quarter-on-quarter rise in over two years, since prices grew a marginal 0.3 per cent in the second quarter of 2020.
In 2022, prices of private homes went up 8.6 per cent, compared to the 10.6 per cent rise in 2021.
For 2023, CBRE Research expects prices could still rise 3 to 5 per cent, with upside supported by low unsold inventory, healthy household balance sheets and higher rents.
Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, expects buyers to stay prudent this year, and the price growth to slow to between 5 per cent and 8 per cent.
This hews close to the 5 per cent to 7 per cent price increase projected by Leonard Tay, Knight Frank’s head of research.
Huttons Asia’s senior director for research Lee Sze Teck said that interest from Chinese buyers picked up over the last two weeks in January, following China’s relaxing of its border controls. Several units at Klimt Cairnhill and 3 Orchard By-The-Park were said to be sold to them.
“The luxury segment of the property market will benefit from Chinese demand in 2023,” he noted, adding that higher construction costs and low unsold supply may cause prices to rise up to 5 per cent this year.
Landed homes lead the way
Private home-price growth was led by those of landed properties, which grew 0.6 per cent in Q4, compared to the 1.6 per cent increase in the previous quarter.
For the whole of 2022, landed home prices rose 9.6 per cent – held back only by sellers’ reluctance to place their properties on the market, despite buyers offering “decent price premiums” for these limited homes, said Knight Frank’s Tay.
Prices of non-landed properties increased 0.3 per cent in Q4 2022, versus the 4.4 per cent rise in the previous quarter. For the whole of 2022, non-landed home prices grew 8.1 per cent.
Non-landed properties in the Rest of Central Region (RCR) posted the fastest growth in Q4, climbing 3.1 per cent, following a 2.8 per cent increase in the third quarter.
Prices of non-landed properties in the Core Central Region (CCR) rose 0.7 per cent in Q4, compared with the 2.3 per cent increase in the prior quarter.
Dented by a lack of major new launches, prices of non-landed properties in the Outside Central Region (OCR) fell 2.6 per cent, after notching a 7.5 per cent increase in the previous quarter.
For the whole of 2022, prices of non-landed properties in the CCR, RCR and OCR increased 4.8 per cent, 9.7 per cent and 9.3 per cent respectively.
Nicholas Mak, head of research and consultancy at ERA, believes the decline in OCR prices in Q4 is a “one-off statistical blip”, and that as more projects in the sub-market are launched for sale, prices there could rise 5 to 10 per cent year on year in 2023.
Ismail Gafoor, PropNex Realty’s chief executive officer, anticipates that home prices in the CCR and RCR could grow slightly faster than that of OCR, as more new residential projects come on in these sub-markets.
“We are not projecting any downward correction in prices at this juncture,” he said, adding that overall private home prices may rise 5 to 6 per cent this year.
Meanwhile, there were 2,694 resale transactions in Q4, compared with 3,719 units transacted in the previous quarter. Resale transactions accounted for 75.1 per cent of all sale transactions in Q4, compared with 60.5 per cent in Q3. For the whole of 2022, there were 14,026 resale transactions, down from the 19,962 resale transactions in 2021.
The drop in resale transaction volumes could be due to increased borrowing costs, as well as the 15-month wait-out period imposed on private property owners looking to buy non-subsidised, resale public housing flats, said Lee Nai Jia, head of real estate intelligence, data and software solutions at PropertyGuru. He does not expect private resale home prices to dip any time soon, due to limited supply and owners being unlikely to lower their prices in the short term.
Fewer new sales and launches
Developers sold 690 private residential units (excluding executive condominiums or ECs) in the last three months of 2022, compared with the 2,187 units in Q3. A total of 504 units were launched for sale, down from 1,455 units in the previous quarter.
Last quarter’s transactions were the lowest number of new homes sold quarterly since Q4 2008, when 419 units were transacted during the Global Financial Crisis, noted OrangeTee & Tie’s Sun.
For the whole of 2022, developers sold 7,099 private residential units, down from the 13,027 units in 2021. They launched 4,528 units for sale last year, the lowest injection of new supply ever; this figure is less than half the 10,496 units launched in the previous year, said Huttons’ Lee.
But while developer sales fell some 45 per cent in 2022, the greater take-up rate of about 157 per cent was “respectable”, and attested to the underlying demand and ample market liquidity, said Lam Chern Woon, head of research and consulting at Edmund Tie.
As developers pick up the pace of launches to about 10,000 units in 2023, he expects an uplift in primary sales to 8,000 to 9,000 units. He anticipates a moderation to 10,000 to 12,000 units in the secondary market. “We expect overall prices to rise by 1 to 3 per cent in 2023,” added Lam.
In Q4, developers launched 1,257 EC units for sale and transacted 1,127 units. In the previous quarter, none were launched, and 28 units were sold. For the whole of 2022, developers launched 1,873 EC units for sale and moved 1,479 units; in 2021, 1,609 units were launched and 2,119 units, sold.
The vacancy rate of completed private residential units (excluding ECs) fell to 5.5 per cent as at the end of Q4, from 5.7 per cent in the previous quarter.
Rentals robust
The rental market remained strong, with rents of private homes growing 7.4 per cent in Q4, following the 8.6 per cent increase in Q3. For the whole of 2022, private home rents shot up 29.7 per cent, compared to the 9.9 per cent rise in 2021. This is the highest annual increase in 16 years since 2007, when rents rose 41.2 per cent, said Edmund Tie’s Lam.
Rents of landed properties grew 6.3 per cent in the last quarter of 2022, compared with the 10.9 per cent increase in the previous quarter. Rents of non-landed properties rose 7.5 per cent, versus the 8.3 per cent increase in Q3. For the whole of 2022, rents of landed properties increased 28.1 per cent, and rents of non-landed properties, 29.8 per cent.
By sub-markets, rents of non-landed properties in the CCR rose 7.3 per cent in Q4, compared with the 7 per cent increase in the previous quarter.
Rents in the RCR grew 7.3 per cent, after a 9.6 per cent rise in Q3. Rents in the OCR increased 8.2 per cent, versus the 8.8 per cent gain in the previous quarter.
For the whole of 2022, rents of non-landed properties in the CCR, RCR and OCR increased 28.2 per cent, 30.3 per cent and 31.8 per cent respectively.
Rents have been rising continuously for over two years, with demand outstripping supply.
This year, however, will bring a significant ramp-up in supply: 19,291 new private homes, including ECs, are slated for completion, said OrangeTee & Tie’s Sun. She expects rents to rise more slowly – around 13 per cent to 16 per cent this year.
Unsold stock remains low
As at end Q4 2022, 16,152 private homes were unsold; of this number, 16,024 were uncompleted.
Chia Siew Chuin, head of residential research, research and consultancy at JLL Singapore, noted that unsold stock rose 12.7 per cent year on year, but remained 57.3 per cent lower than the pre-pandemic peak in the first quarter of 2019. It is also lower than the annual average of 26,951 units from 2012 to 2021.
She said that the level of unsold stock could potentially improve in the long term, though recovery will likely be gradual, given that developers remain highly cautious in land acquisition.
In total, 16,961 units with planning approvals (including ECs) remained unsold as at end Q4, compared to 17,737 units in the previous quarter and 16,139 units a year ago.
Including ECs, some 19,291 units will be completed in 2023, with another 12,824 units expected to be completed in 2024. This compares with the total of 15,900 units completed in 2021 and 2022.
A bigger supply, with planning approval, totalling around 19,600 units as of Q4 2022, will be completed beyond 2024.
0 Comments