Private home prices expected to rise this year after 2.5% gain in 2019

Prices of private homes in Singapore are expected to rise by between 1 and 5 per cent this year, analysts say, after clocking a 2.5 per cent gain in 2019.

At 2.5 per cent, the price growth moderated from the 7.9 per cent clip in 2018, the Urban Redevelopment Authority’s (URA) flash estimate showed.

For the fourth quarter of 2019, the overall price index for private homes was up 0.3 per cent – led by the landed segment – over the prior quarter, compared to 1.3 per cent in Q3 2019. This marks the third consecutive quarter in 2019 where private home prices went up.

Nicholas Mak, head of research & consultancy at ERA Realty, noted that the private residential overall price index has been gradually rising, and is now “only 0.8 per cent lower than the previous peak in Q3 2013”.

Still, with prices rising by a much smaller margin in 2019 vis-a-vis 2018, Cushman & Wakefield’s head of research for Singapore and South-east Asia Christine Li said: “This strengthens the notion that there is no excessive exuberance in the Singapore residential market and prices are likely to stay in line with economic fundamentals and affordability. There is thus no need for the government to intervene at this juncture, as the market is finding its own equilibrium.”

In the fourth quarter of last year, prices of landed property rose 4 per cent, after edging up 1 per cent in Q3 2019. Dr Lee Nai Jia, head of research at Knight Frank, said: “The improvement in prices of landed properties could be due to sustained interest from buyers, who feel that landed homes are good assets for wealth preservation amid the uncertain economic outlook. The increase could also be reflective of the higher prices of choice landed properties which transacted in Q4.”

Meanwhile, price increases of non-landed private homes varied by region in the fourth quarter. Prices of non-landed private residential properties in the core central region (CCR) fell by 3.7 per cent, versus a 2 per cent increase in the previous quarter.

Based on the transactions during the quarter, the decline in non-landed CCR prices in the fourth quarter “could be due to projects that have been completed earlier but still have inventory”, said Tricia Song, head of research (Singapore) at Colliers International. These include Marina One Residences, which sold 43 units in the quarter at a median price of S$2,242 per square foot (psf), after having moved 30 units in the preceeding quarter at a S$2,503 psf median.

Nine units were sold at South Beach Residences in Q4 2019 at a median price of S$3,097 psf, compared to 10 units in the third quarter at a median price of S$3,349 psf.

In the rest of central region (RCR), prices went down by 1.4 per cent in Q4, after registering a gain of 1.3 per cent in the previous quarter. The fall could have stemmed from “the high base achieved in Q3 2019 for new launches such as Avenue South Residence, One Pearl Bank and Meyer Mansion,” suggested Ms Song. No new launches took place in the RCR in Q4.

Prices of non-landed private homes in outside central region (OCR) bucked the trend by going up 2.9 per cent, compared to a 0.8 per cent increase in the preceding quarter. JLL’s senior director of research & consultancy Ong Teck Hui pointed to robust pricing at certain new projects in the OCR, such as Sengkang Grand Residences, which sold 235 units at a median price of S$1,741 psf in November when it was launched.

“As prices in the OCR are the most affordable compared to other sub-markets, the price outlook for this segment remains positive,” he added.

For 2019, non-landed prices in CCR fell by 2.6 per cent, while prices in RCR and OCR went up by 2.7 per cent and 4.3 per cent respectively.

With over 50 new residential projects launched last year, OrangeTee & Tie’s head of research & consultancy Christine Sun estimates that 9,500 to 10,000 new homes were sold, and that 9,000 to 9,800 new homes could be bought this year. Overall prices are likely to go up by between one and three per cent this year, she said.

“While fewer projects could be launched this year – especially mega ones with above 1,000 units – we are positive about the private residential market for 2020. We may also see more luxury home sales, as a slightly higher proportion of luxury project launches are coming this year.” Such projects include The Avenir, Kopar at Newton, Van Holland and The Atelier.

Huttons Asia research director Lee Sze Teck reckons there could be nearly 50 launches this year, with 11,000 units released to the market for sale. Of these, about half are in the CCR. He said: “The sales momentum in 2019 is likely to carry forward in 2020. We could see sales volume maintain at a similar level of between 9,000 and 10,000 units in 2020.”

Ms Li sees prices as “remaining sticky, with an upward bias of up to 3 per cent”; PropNex Realty’s chief executive Ismail Gafoor sees overall price growth of 2-3 per cent in 2020. “As the real estate market remains resilient, developers are starting to raise the prices for unsold units,” he said.

Knight Frank’s Dr Lee projects that private residential prices could grow by 2 to 5 per cent this year, albeit with the market remaining segmented. Huttons’ Mr Lee sees prices rising by 3 to 5 per cent; Mr Mak expects the private housing property price index could rise by 2 to 3 per cent this year.

URA’s flash estimates are compiled based on transaction prices given in contracts submitted for stamp duty payment and data on units sold by developers up till mid-December. The statistics will be updated on Jan 23, when URA releases its full set of real estate statistics for the fourth quarter of 2019.

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