The price growth in Q2 was slightly slower than the 3.9 percent increase in Q1.
Singapore private home prices rose 3.4 percent quarter-on-quarter in Q2 2018 compared to a slightly faster growth of 3.9 percent in Q1, according to more complete data released by the Urban Redevelopment Authority (URA) on Friday (27 July).
“The URA residential price index registered its fourth consecutive quarter of growth. This represents a 9.1 percent increase from the trough in Q2 2017, and a year-to-date recovery of 7.4 percent,” said Desmond Sim, CBRE’s research head for Singapore and Southeast Asia. The annual price growth also exceeds the 5.41 percent year-on-year rise in Q1 2018.
The price increase was driven by the 5.6 percent gain in the Rest of Central Region (RCR) and the 3.0 percent rise in the Outside Central Region (OCR) as launches saw good demand in both areas.
Moreover, sales of private homes in the second quarter was healthy with 2,366 units sold, while 2,437 uncompleted private homes were launched for sale during the period.
The number of launches was the highest in five quarters, Sim noted. “Despite the healthy take-up, demand could not match the supply from new launches, leading to a higher number of unsold units (26,961) in Q2 2018 as compared to 24,193 units last quarter”.
In Q2 2017, property developers launched and sold 2,011 units and 3,077 units respectively, with unsold houses numbering 17,827 in all. The figures for the launches and sales exclude executive condominiums (ECs), but the number of unsold units include this and comprise dwellings with planning approval.
URA said there is a potential supply pipeline of 19,500 units (including ECs) as of 30 June that have not been granted planning approval yet. These consist of around 8,400 units from awarded Government Land Sales (GLS) and confirmed list sites that have not been awarded yet, as well as about 11,100 units from awarded collective sales, including en bloc sites sold until mid-July.
The government agency revealed that a large part of this upcoming supply of units could enter the market this year or in 2019, with completion targeted by 2021 onwards.
However, Sim explained that supply from en bloc sites might vary due to the inherent complexities of the collective sale process as well as pressures from the recent property curbs.
“CBRE expects exuberance in the collective sale market to calm as the measures will have a greater impact on land acquisitions. Developers will have to adjust their pricing expectations, marketing strategies, and timing of their launches.
“On the demand side, buyers are expected to be more selective as they recalibrate their budgets and options. However, we expect the price index to continue to display some growth till year end, as some new launch prices are establishing new benchmarks on the back of higher land costs,” he added.
Meanwhile, the URA’s rental index rose 1.0 percent quarter-on-quarter in Q2, but it is only 0.39 percent higher on an annual basis. The vacancy rate also slid to 7.1 percent from 7.4 percent in the prior quarter and 8.1 percent in Q2 2017.