Good news for sellers (and developers). The increase in residential property prices, which include condo prices, is expected to last until Q3 2020, a new Savills Research report revealed.
Based on URA data, private home prices rose a second consecutive quarter in Q3 2019 by 1.3%, after 2.0% in Q2. This increase is mostly driven by newly launched projects, which buyers have been lately observed to gravitate towards at the expense of resale property according to the latest PropertyGuru quarterly report.
However, the Savills report also noted certain factors that may stunt the upward momentum of prices. “Although studies have shown that the up-leg of our price cycle tends to last 8.7 quarters, but with the global headwinds driven by social and political tensions, it may be better to err on the side of caution and choose a shorter time frame of 6 quarters as the base case,” the report wrote.
Savills also recommended that the current private residential market be left “unperturbed” by government intervention despite the rising prices and economic conditions.
“Given the fickleness of market behaviour these days, any measures to rein in demand may instead destabilise it. There will then be the attendant negative spillover effects into the other domestic sectors of the economy. The risk of intervention may incite an unknown market behaviour to emerge,” said the report.
Over half of sales were for smaller-sized units
The Savills report additionally noted that a sizeable group of private buyers put their money into smaller-sized units. Specifically, 34.8% of new units sold in the first nine months of 2019 were between 600 sq ft to 800 sq ft, while 27.6% were from 400 to 600 sq ft.
“We are seeing buyers go for compact units because of limited capital,” said Tan Tee Khoon, Country Manager of PropertyGuru Singapore. “The tight budget also partly explains their preference for newly launched properties, as these typically have a lower quantum price than resale properties by virtue of being smaller in floor area, as well as more a favourable payment schedule.”
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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email email@example.com