Robust housing demand but rising prices could weigh on affordability
  • Press Release
  • 16 February 2022

Robust housing demand but rising prices could weigh on affordability

SINGAPORE, 16 February 2022 – The stellar resilience of the residential market continues despite the global pandemic. A robust spate of take-up in the primary market combined with the dwindling inventory has invigorated developers’ confidence and sense of urgency. Overall private property prices rose for the seventh consecutive quarter in 4Q 2021 amid sustained demand and ended the year 10.6% higher than a year ago. The landed segment saw more buoyant price growth of 13.3% while the non-landed segment saw prices rising by 9.8% in 2021. Nonetheless, non-landed prices rose at a faster clip of 5.3% qoq in 4Q 2021, compared to 3.9% for the landed segment.

All non-landed market segments recorded price an acceleration in price growth or reversal of declines during the quarter. The strongest price growth of 6.7% qoq was posted in the Rest of Central Region (RCR), followed by the Outside Central Region (OCR, 5.7%). The Core Central Region (CCR) also saw positive price growth of 2.7% qoq in the quarter, following a 0.5% decline in the previous quarter.

EDMUND TIE’s Head of Research and Consulting, Mr Lam Chern Woon, said: “The dip in home prices in the CCR and OCR in 3Q 2021 have proved to be temporary. The RCR outperformed the other segments for the second consecutive year as buyers favoured locations in the city fringe which struck a balance between proximity to the city and affordability.”

Overall transaction volumes dipped in 4Q 2021 by 12.7% qoq to 7,925 units from 3Q 2021’s 9,083 units. This was the result of the tight viewing restrictions during the Stabilisation Phase which lasted almost two months, the easing of borders which led some families to venture abroad and return via the VTL schemes, as well as a pullback in activity on the back of rising prices. The primary market saw a somewhat larger decline of 15.0% qoq in transaction volumes during the quarter compared with 11.3% for the secondary market. In 4Q 2021, new sales volumes continue to outpace launch activity. Both the CCR and RCR saw growth in new sales volumes of 32% qoq and 35% qoq respectively.  

Mr Lam commented: “Amid a strong economic rebound, abundant liquidity, and the outperformance of certain economic sectors last year, developers moved 13,027 residential units, a solid increase from 2020’s 9,982 units.  The secondary market also saw a near doubling in transaction volumes to hit a decade-high. The strong take-up rates for units in the RCR and OCR attest to the sustained demand for fringe and suburban homes as buyers predict a continuation in work-from-home culture.”

In the non-landed primary market, the increase in transaction share in 4Q 2021 was recorded in the ends of the size spectrum, namely units below 500 sqft (from 3.3% to 8.5%) and units sized 1,500 sqft and above (from 5.8% to 7.8%). Despite the revival in smaller units in 4Q 2021, the share of units priced below $1 mn declined to 4.9% from 9.0% in the previous quarter.

Mr Lam commented: “Small units gained market share towards the end of last year as rising prices weighed on home affordability. Nonetheless, rising property prices and the preference for larger units have saw more pricey homes sold in the last two years. Compared to the start of the pandemic in 1Q 2020, transactions priced $2mn and above have seen a tripling in their share from 12.8% in 1Q 2020 to 37.4% in 4Q 2021.”

Foreign demand held steady in 4Q 2021; the number of homes sold to non-PR foreigners dipped marginally to 257 units from 266 units in 3Q 2021. However, the share of homes sold to foreigners rose from 3.4% in 3Q 2021 to 4.3% in 4Q 2021; in particular, the increase in foreign demand share occurred in the RCR from 2.8% in 3Q 2021 to 4.1% in 4Q 2021.

Mr Lam commented: “Despite road bumps in the VTL scheme, such as its temporary suspension during peak infection periods, foreign confidence in Singapore’s treatment of the pandemic is still strong. It may take some time for the new ABSD rates to be digested but Singapore remains a key investment destination for foreign capital and we expect a gradual recovery in foreign demand towards pre-pandemic levels over time.”

Resale profitability improved further as the loss-making share of transactions for the overall market (landed and non-landed) fell further from 11.0% in 3Q 2021 to 8.6% in 4Q 2021, although this belies volatility across the individual months within the quarter. The trend was similar for the non-landed segment. For the whole of 2021, the loss-making share for the overall market was 11.4%, a sharp easing from the elevated 16.8% in 2020.

Mr Lam commented: “The fundamentals of the housing market remain sound in terms of genuine first-time homebuying demand and general affordability, but the rising number of Omicron cases is concerning. Homebuyers will continue to favour larger units, although affordability constraints would mean that smaller units remain an essential element of the housing ecosystem. As we adjust towards an endemic Covid, buying interest will also likely pivot towards the prime segment which lost some share to the suburban segment in the last two years.”


For further information, please contact:

Chan Yee Yin (Ms)
Head, Corporate Communications
O: + 65 6393 2369

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