In Q1 2022, we saw the full impact of the December 2021 property cooling measures settle in. Sales volumes of private homes dipped, as did the transaction volumes of HDB resale flats. Still, prices maintained their upward trajectory though the growth was muted, indicating an impending slowdown.
With interest rates set to rise, the cost of borrowing is expected to rise further. This may further dampen demand, setting the stage for a subdued Q2 2022.
However, both prices and demand in the HDB and private rental markets continue to increase, amidst declining rental supply. More foreigners are predicted to return to Singapore, which may contribute to a boost in rental demand. In the coming quarter, the co-living movement may gain momentum.
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Get the Guru View: Key Findings of the Singapore Property Market Report Q2 2022
Singapore Property Sale Market Index Q2 2022
In Q1 2022, prices for all property types continued to increase, albeit at a muted pace. The Singapore Property Sale Price Index saw a 1.98% quarter-on-quarter (QoQ) growth compared to the 5.07% QoQ increase recorded from Q3 2021 to Q4 2021.
Effects of the December 2021 property cooling measures were felt in the private market this quarter, especially in the non-landed private property market. While prices continued to increase, growth was more measured than in the previous quarter.
A repeat of the spectacular price surges observed in the 2021 HDB resale market seems unlikely this year, primarily due to HDB resale prices being at a record high. Prices are likely to make only small gains – or hover at the current peak – at least until the supply crunch is alleviated.
Firstly, the fresh round of BTO construction delays and unwillingness to wait out long BTO completion times continue to funnel young families towards the HDB resale market. Secondly, over 25,000 newly MOP-ed flats entered the open market in 2021. These flats tend to command a higher price due to their long remaining lease and move-in condition.
Thirdly, due to the absence of new executive condominium (EC) and condominium launches in Q1 2022, the HDB upgraders turned towards resale HDB flats which are larger and/or located in the more expensive city-fringe areas. Altogether, these factors create a potent cocktail to keep demand strong and prices propped up.
Top Performing Districts and Projects
Based on the number of units transacted, Normanton Park (District 5), The Florence Residences (District 19), and Dairy Farm Residences (District 23) were the top three best-selling new condo launches in Q1 2022.
Districts across the OCR, RCR, and CCR are evenly represented on our list of top-performing districts for the greatest QoQ growth in median PSF transaction prices.
In the coming quarter, major Q2 2022 launches such as the North Gaia EC, LIV @ MB, and Picadilly Grand are likely to draw notice to the districts in which the projects are located.
There is also pent-up demand for ECs, based on the limited leftover stock on the market. The EC market remains unaffected by the latest round of property cooling measures, with both HDB upgraders and first-time home buyers displaying a keen interest in the property type.
Attention remains focused on the HDB estates of Hougang, Punggol, and Sengkang, as the bulk of the 31,000 HDB flats set to hit their five-year mark this year are in those neighbourhoods. The surprise, but welcome, announcement of the upcoming Farrer Park and Greater Southern Waterfront BTO projects may also rejuvenate interest in HDB resale flats in the surrounding areas.
Singapore Property Rental Market Index Q2 2022
Median asking prices for rental properties listed on PropertyGuru saw a new high, with the HDB rental market registering the biggest spike this quarter. Similarly, the Rental Demand Index maintained its robust QoQ growth as the Rental Supply Index plunged, settling at a record low.
Unlike the HDB resale market, HDB rental prices are increasing with no signs of slowing down. The Rental Price Index for HDB flats for Q1 2022 sits at 185.69 points, compared to the overall Rental Price Index of 145.22 points.
The drivers for rental demand remain unchanged: couples affected by a fresh round of BTO construction delays see renting as an alternative while waiting for their homes to be built; singles and unmarried couples wish for space and privacy apart from their families. Until the BTO flat supply is restored, demand and prices for HDB rental flats are unlikely to abate.
As Singapore transitions to living with COVID-19 as an endemic, expatriates are returning and renting private properties. Sharp spikes in private property rental prices are indicative of this movement. Potentially, we may see this demand spill over to co-living spaces.
Additionally, the latest round of cooling measures saw Additional Buyer’s Stamp Duty (ABSD) rates hiked to 30% for foreigners for any property purchase. Those who might have bought a property may have been encouraged to rent instead, further driving up rental prices.
Top Performing Districts by Rental Yield
Once again, OCR and CCR districts monopolise the list of top performing districts by rental yield when it comes to private property types.
As more return to the office, the existing expatriates in Singapore may have opted to rent properties closer to their offices in the CBD. Hence, this could have accounted for the boost in rental prices, and therefore, rental yield of properties in the CCR and prime districts.
The HDB towns on the list have not undergone much reshuffling, with the only change being Geylang taking Marine Parade’s previous spot on the list. Mature HDB towns still command the highest rental yield percentages.
The first quarter of 2022 started off on a good note, despite the medley of concerns which included adjusted property tax rates, looming interest rate hikes, economic uncertainties and the prospect of stagflation brought on by the Russia-Ukraine war. Rising costs of borrowing in 2022 and beyond are set to dampen demand further, as buyers take a more cautious approach to purchasing a property.
However, the voracious appetite for public housing will keep the HDB resale market buoyant until the BTO supply is fully restored in the next four years.
With foreigners set to return to Singapore. All indicators point towards another red-hot quarter for the rental market in Q2 2022.
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