Singapore private home price growth slows sharply in Q1 on cooling measures

April 4, 2022

The pace of Singapore's private property growth slowed to a mere 0.4 per cent in the first quarter. Credit: Alphonsus Chern

SINGAPORE - The latest round of property curbs has taken the sizzle out of Singapore’s red-hot private property market, as the overall price rise slowed to a mere 0.4 per cent in the first quarter of this year.

Analysts said this marked the slowest quarter-on-quarter price increase since the second quarter of 2020 when prices grew 0.3 per cent.

This followed a 5 per cent jump in the fourth quarter of last year, the highest quarterly increase since the second quarter of 2010, when prices rose 5.3 per cent.

Among reasons cited for the slowdown were a dearth of new project launches, uncertainty from the Ukraine conflict, the Chinese New Year festivities and a sharp surge in Covid-19 cases disrupting viewings and sales.

Ms Tricia Song, CBRE head of research for South-east Asia, noted: “New launches in the quarter were limited to smaller boutique projects as developers adopted a wait-and-see approach after the new cooling measures. Likewise, buyers largely held back to reassess the situation.”

Thinner transaction volumes contributed to weaker price growth, ERA Singapore’s head of research and consultancy Nicholas Mak said.

More than 1,600 new homes, excluding executive condominiums (EC), and about 2,600 resale units changed hands in the first quarter, sharply lower than the 3,018 new homes and 4,748 resale homes transacted in the previous quarter, according to caveats data.

The slight overall price gain was due largely to the landed property segment, which extended gains by 4 per cent, according to flash estimates from the Urban Redevelopment Authority (URA) on Friday (April 1).

This is the highest quarterly increase for landed prices since the first quarter of 2021 when they jumped 6.7 per cent. It is also up from the 3.9 per cent rise in the fourth quarter of 2021.

Mr Wong Xian Yang, Singapore research head at Cushman & Wakefield, said the landed segment is unaffected by the new cooling measures as demand is largely driven by owner-occupiers, and the supply of such homes is limited.

In contrast, non-landed properties suffered their first quarterly price fall since the first quarter of 2020, with a drop of 0.6 per cent.

By region, only the suburbs, or outside central region (OCR), saw gains, with prices rising 1.9 per cent, compared with a 5.7 per cent surge in the previous quarter.

Said Ms Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie: "New home supply is lacking in the suburban areas as there are very few mega launches in OCR this year and the total unsold stock of launched projects continues to decline steadily every month.

"Mass market home buyers or Housing Board upgraders are also not as adversely affected by the cooling measures as most do not own multiple properties."

Mr Wong noted: “While sales in the suburbs fell, sellers there benefited as investors who were priced out of the city fringe market gravitated towards more affordable suburban properties.”

In the city fringe, or the rest of central region, non-landed prices fell 3 per cent, reversing from a strong 6.7 per cent gain in the fourth quarter.

Activity in this submarket was muted due to the lack of new launches, and most sales transactions came from earlier launches such as Normanton Park, Avenue South Residence and One Pearl Bank, PropNex’s head of research and content Wong Siew Ying noted.

In contrast, the strong price growth in the city fringe in the fourth quarter had been fuelled by the launch of Canninghill Piers at benchmark prices of nearly $2,900 per square foot.

Meanwhile, prices in the prime districts, or core central region, dipped 0.5 per cent in the first quarter, reversing from a 2.7 per cent gain in the fourth quarter, as the new property curbs took a toll on investors and foreign buyers, Ms Sun said.

Mr Ong Teck Hui, senior director of research and consultancy at JLL, sees headwinds arising from rising interest rates and geopolitical uncertainty.

“The latter will lead to rising costs, which could moderate economic growth, employment and wages and may affect sentiment,” he said.

CBRE's Ms Song, however, sees sales “picking up substantially on attractive new launches in specific months. In the short-term, the Singapore market could also benefit marginally from safe-haven flows”.

PropNex said the relaxation of safe management measures and easing of travel restrictions could bode well for property sales.

Credit: Straits Times

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