Private home prices up for fifth straight quarter, but pace slows
The Straits Times - 7/1/2021; Last Update - 7/24/2021

Private home prices in Singapore rose for the fifth straight quarter but at a much slower pace, dampening speculation of another round of property curbs in the near future.

The 0.9 per cent price gain in the three months to June from the previous quarter follows an increase of 3.3 per cent in the first quarter and 2.1 per cent in the fourth quarter of last year. Year on year, prices are up 7.3 per cent.

The Urban Redevelopment Authority's (URA) flash estimates released yesterday showed that prices of landed properties edged up only 0.8 per cent in the second quarter, compared with a 6.7 per cent jump in the previous quarter.

Non-landed properties saw a 0.9 per cent rise after climbing 2.5 per cent in the first quarter.

The slower growth in prices of both landed and non-landed homes, coupled with lower transaction volumes as some developers delayed new launches in the face of phase two (heightened alert) restrictions, dampened overall price growth in the second quarter.

New non-landed home sales fell to 2,617 units for the second quarter as at June 20, from 3,493 in the first quarter, said Mr Wong Xian Yang, Cushman & Wakefield's head of research for Singapore, citing URA Realis data.

Another factor is the possibility of interest rates rising, which will have a cooling effect on housing demand and prices, said Mr Lee Nai Jia, deputy director of the Institute of Real Estate and Urban Studies at the National University of Singapore.

The United States Federal Reserve could raise interest rates as early as next year due to concerns over inflation, triggering other central banks to do the same, he said.

Mr Ismail Gafoor, chief executive of PropNex, believes that the moderation in price growth, together with the latest comment by Monetary Authority of Singapore (MAS) managing director Ravi Menon that the property market is not overheated, makes it unlikely that new curbs will be introduced in the near term.

Mr Menon also said that the MAS remains "highly vigilant" to the risk of a sustained increase in housing prices relative to income trends, with a prolonged divergence seen as unsustainable and "undesirable from a housing affordability perspective".

Mr Wong noted that the market recovery from the second quarter of last year to the same quarter this year is more gradual compared with the uptrend from the third quarter of 2017 to the third quarter of 2018, when prices jumped 9.6 per cent, precipitating the July 2018 cooling measures. Therefore, the risk of a fresh round of cooling measures seems to be lower now, though not eliminated, he said.

Ms Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, noted that the second quarter's price growth is the slowest in three quarters.

In the suburbs or outside central region, where new home supply is leanest, non-landed home prices rose 1.8 per cent quarter on quarter, she said.

The price increase was less significant for the city fringe or the rest of central region at 0.3 per cent, compared with a 6.1 per cent jump in the previous quarter. Prices rose 0.6 per cent in the prime districts.

"As resale homes formed a higher proportion of transactions last quarter, the overall price index was pulled down by the lower prices. According to caveat data from URA, 60.5 per cent of landed and non-landed homes were resale homes, up from 56.6 per cent in the first quarter," Ms Sun added.

On the slower price growth of landed homes, Huttons Asia director of research Lee Sze Teck said: "After a strong run-up in prices in the first quarter, some owners raised their asking prices... resulting in a pullback in the second quarter."