Ministry of National Development responds to private property prices increase into the fifth consecutive quarter and its plans to manage trend
In responding to a Parliamentary question asking if there is an expectation that the 5th consecutive quarter rise in private property prices will continue in the foreseeable future; and whether there are any plans by the Government to manage this trend, the Minister for National Development responded that the Government is committed to ensuring a stable and sustainable property market.
The Minister said private property prices increase reflects broad-based demand for housing, supported by the low interest rate environment.
“The increase in private housing prices since the second quarter of 2020 reflects broad-based demand for housing, supported by the low interest rate environment. However, the pace of price increase slowed in 2Q2021, with prices increasing by 0.8% quarter-on-quarter, compared to the 3.3% increase in 1Q2021.
“As has been previously communicated, the Government’s intent is to ensure a stable and sustainable property market, where prices move broadly in line with economic fundamentals. To this end, the Government continues to monitor economic and property market conditions closely.”Minister for National Development
Despite the re-tightening of measures in late-July and that there was only one major launch, July’s developer sales surged 82.2% month-on-month to 1,589 units, demonstrating continued strength in demand for homes, in particular, in the OCR.
Data released by the Urban Redevelopment Authority on Monday (16 August) showed that 1,589 new private homes (excluding Executive Condos) were sold in June, up 82.2% month-on-month (m-o-m) from the 872 units that were shifted in June 2021.
On a year-on-year basis, developers’ sales climbed 46.7% from the 1,083 units (excl. ECs) transacted in July 2020. The strong showing in July might reflect pent-up demand in the months of May and June ,when tightened restrictions disrupted viewings at show galleries.
This brings developer sales year-to-July to 8,048 units, a 62.8% increase from the 4,945 units moved over the corresponding period last year, which included two months of lock-down in 2020.
Ms Tricia Song, CBRE’s Head of Research for Southeast Asia, said: “Following the dearth of new launches seen in June, July saw the sole launch of Pasir Ris 8, as the launch of Watergardens at Canberra was postponed due to reimposed capacity restrictions at show galleries in late-July. In July, besides Pasir Ris 8, developer sales were predominantly from existing launches, with the suburban or OCR segment leading. Sales in the high-end segment or CCR saw a slight moderation from June’s performance.”
CBRE noted that the best-selling private residential project in June was Pasir Ris 8, in the OCR, which moved 418 units or 86% of its total 487 units at a median price of $1,624 psf, a record price for a 99-year leasehold project in Pasir Ris. In percentage terms, this is the best-selling project in 2021 thus far. The good sales could be attributed to its draw as an integrated development that is directly connected to Pasir Ris MRT station, Pasir Ris bus interchange and a shopping mall, as well as lack of a major launch in Pasir Ris since 2014.
Normanton Park in the RCR sold another 125 units at a median price of $1,825 psf. Midwood is the third best-selling project in July, moving 91 units at a median price of $1,656 psf. And that by market segments, OCR and RCR are leading, while the momentum of sales in the CCR has slowed from recent launches. Outside Central Region (OCR) or the proxy for the mass market segment made up 63.7% of total sales (excl. ECs), compared to 38.6% in June 2021.
The Rest of Central Region (RCR) or city fringe projects made up (excl. ECs) 27.6%, compared to 37.7% in June 2021, noted CBRE Research. Core Central Region (CCR) or a proxy for the high-end segment made up the remaining 8.7% of total sales (excl. ECs) in July, compared to 23.6% in June 2021.
Ms Song said, “We expect to see healthy new home sales in the next few months as the major launches coming up are attractive. Watergardens at Canberra and Parc Greenwich are mostly affordable, mass-market projects in the OCR well-suited for upgraders. Supported by strong HDB resale prices, there will be a ready pool of demand coming from upgraders for these launches. The strong response seen at the launch of Pasir Ris 8 could also boost market sentiment and spur sales of other OCR projects.”
“In the higher-end segments, CanningHill Piers, the residential component of the Liang Court redevelopment, targeted to launch in the fourth quarter of 2021, could also ride on the refreshed interest for integrated developments.
“Domestically, the COVID-19 situation has stabilised with the national vaccination programme continuing to make good progress. On 11 August 2021, MTI has upgraded Singapore’s GDP growth forecast for 2021 to 6.0% to 7.0%, from 4.0% to 6.0%, taking into account the better-than-expected performance of the Singapore economy in the first half of the year, as well as the latest external and domestic economic developments.
“The Government has announced plans to reopen borders in September and form travel corridors with countries which have successfully managed COVID-19. Such a development could result in the return of foreign demand. As such, we expect the momentum in the housing market to remain positive.
“With YTD tally at over 80% of 2020’s full year take-up, we expect 2021 new developer sales to come in at around 11,000 units, exceeding 2020’s 9,982 units.
“With prices up 4.1% year-to-June, CBRE Research expects private home prices to rise by 6.0% to 8.0% for the full year, barring any unforeseen circumstances.”Ms Song