SINGAPORE, 10 November 2021 – Singapore’s economy grew by 14.7% yoy in 2Q 2021, a substantial increase from the 1.5% yoy in 1Q 2021. While some uncertainties remain, strengthening global demand and the government’s commitment to Singapore’s reopening plans will drive the nation’s economic recovery path.
According to the Urban Redevelopment Authority’s (URA) All Residential Property Price Index (PPI), prices for private homes rose for the sixth consecutive quarter in 3Q 2021 by 1.1% quarter-on-quarter (qoq). The quarter’s price growth was led by price increases for landed homes, whose PPI rose by 2.6% qoq, following the 0.3% dip in 2Q 2021. The PPI for non-landed homes rose by a more modest 0.7% qoq following the 1.1% qoq growth in 2Q 2021, marking its sixth consecutive quarter of growth.
Among the market segments for non-landed homes, the PPI for the Rest of Central Region (RCR) posted the strongest qoq growth of 2.6% in 3Q 2021. The Core Central Region (CCR) and Outside Central Region (OCR) on the other hand posted a 0.5% and 0.1% qoq decline respectively.
EDMUND TIE’s Head of Research and Consulting, Mr Lam Chern Woon, said: “The dip in the PPI for OCR homes ended a 5-quarter streak of price growth, suggesting that the suburban home prices are consolidating, as market demand rotated towards the CCR.Compared to landed homes, the non-landed segment on the whole have exhibited more controlled price growth during the pandemic, ensuring affordability for most purchasers.”
In 3Q 2021, median prices for units in the 1,000 to 1,500 sqft category posted a qoq growth of 7.7%, indicating robust demand for more sizeable units due to longer times spent at home induced by the pandemic. The median prices for units below 1,000 sqft recorded qoq declines of 8.5% for the below 500 sqft category and 4.5% for the 500 to 700 sqft category, suggesting slowing mass market demand for the smaller units.
In 3Q 2021, Singapore went through multiple rounds of easing and tightening of safe management measures throughout June and July, before progressing to the Preparatory Stage in August, the first policy indication of accepting COVID-19 as an endemic disease. This changing mindset, subsequent easing of selected measures, the opening up of borders, and improving buyer confidence likely contributed to the increase in sale activity in 3Q 2021, with primary sales growing by 19.7% qoq to 3,550 units and secondary sales growing by 0.9% qoq to 5,533 units. All in all, overall transaction volume grew by 7.5% qoq to 9,083 units. On a yoy basis, overall transaction volume grew by a substantial 28.9%.
Across the market segments, the OCR recorded the largest qoq growth of 28.3% in overall transaction volume, with qoq growths of 97.7% and 4.0% in primary sales and secondary sales respectively. The OCR’s strong growth in primary sales volume for the quarter was accounted for by its sizeable 81.4% qoq growth in new launches, which at 1,319 units was the most out of the market segments. The main projects contributing to this figure were Pasir Ris 8 by Allgreen Properties & Kerry Properties, which was launched in Jul 2021, and The Watergardens At Canberra by UOL Group, Kheng Leong, & Singland, launched in Aug 2021.
In the CCR, overall transaction volume slid by 24.9% qoq in 3Q 2021. Secondary sales volume decreased by 9.8% qoq, while primary sales dipped by a more significant 45.5% qoq, which corresponded to the 59.8% qoq fall in new launches within the CCR for 3Q 2021. The new project launches for the quarter were Klimt Cairnhill by Glopeak Development, launched in Aug 2021, and Jervois Mansion by Kimen Realty, launched in Sep 2021.
In the RCR, overall transaction volume in 3Q 2021 remained relatively unchanged with a 0.4% qoq decline. Primary sales fell by 4.6% qoq, while secondary sales increased by 3.0% qoq. Developer launch activity in the RCR for 3Q 2021 was subdued, with the only significant launch being the 115-unit Bartley Vue by Wee Hur that was launched in Sep 2021.
Mr Lam commented: “The quarter’s strong take-up rate for new OCR launches attests to the sustained demand for suburban homes due to continued work-from-home culture and lower price quanta.
In the non-landed primary market, the highest proportion of transactions in 3Q 2021 by unit size were of units between 700 and 1,000 sqft, which accounted for 39.4% of the quarter’s total primary sales. This is a change from 2Q 2021, when the largest proportion of transacted units were between 500 and 700 sqft. Furthermore, there was an increase in the proportion of transactions of larger units above 1,000 sqft, which collectively made up 33.5% of the primary sales in 3Q 2021 as compared to 27.3% in 2Q 2021, marking the third consecutive quarter of increase. Conversely, there was a sharp qoq decline in the proportion of small units below 500 sqft in 3Q 2021, from 9.4% in 2Q 2021 to 3.3%, marking the third consecutive quarter of decline. Mr Lam commented that “these trends reflect a shift in preference to the larger units with more bedrooms away from studio apartments, which may have lost some appeal amongst buyers despite their lower price quanta.”
There was however growth in the proportion of transactions below $1mn, from 5.4% in 2Q 2021 to 9.0% in 3Q 2021, taking share away from transactions in the $1 to $1.5mn range. This suggests robust availability and mass market demand for units that were priced at a lower quantum.
Despite the Multi-Ministry Taskforce’s announcements of the country classifications and the Vaccinated Travel Lanes (VTLs) in Aug 2021, which sought to provide a higher degree of flexibility to Singapore’s border measures, the number of purchases made by foreign non-PR buyers in 3Q 2021 dipped 6.3% qoq to 266 units, marking the third consecutive quarter of decline. Across market segments, the CCR and RCR recorded qoq dips of 12.2% and 16.9% respectively in the number of home purchases made by foreign non-PR buyers in 3Q 2021. Conversely, the number of transactions in the OCR recorded a qoq growth of 22.0% in 3Q 2021, driven by the strong growth of new launches in the OCR.
Mr Lam commented: “Moving forward, we expect homebuying demand to remain buoyant, especially in the suburban locations where the pricing quanta are lower and relatively more affordable. As WFH practices become more entrenched within the economy, homebuyers are increasingly looking towards the less central locations. While location and price remain the key drivers of demand, buyers will increasingly factor in other project features such as flexible unit design and layout efficiency, communal areas and facilities, and smart-living features into their buying decision. Given the improving economic fundamentals and a buoyant public resale housing market, we expect the residential market to remain on sound footing as we move into the final quarter of the year.”
ENDS
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