Private and Home Prices Continue to Increase in Q2 2021

Private and Home Prices Continue to Increase in Q2 2021

Over the past few years, Singapore property developers have relied heavily on foreign money to fund their projects. As a result, property prices in the country have increased dramatically. Foreign investors now account for over 50% of total residential property sales in the country. While this is great for buyers, the high price of these properties has resulted in a glut of properties that must be sold quickly. If you are looking to invest in a new apartment, or want to take advantage of the current property boom, then there are several things you should know about the current Singapore property market.

One of the main reasons why Singapore’s property prices have remained relatively high is the lack of planning and development. While Singapore’s government is responsible for developing roads, sewers, and the overall infrastructure of the country, much of the planning and building has been left to local companies and private builders. With only a small amount of resources allocated for comprehensive planning, the cost of building and developing residential property in the country has significantly decreased over the years. With more resources being allocated to improving infrastructure, the cost of property has also decreased.

Singapore saw exclusive house costs and HDB resale costs continue to raise in the 2nd quarter of 2021, albeit at a slower rate. The latest flash estimates from the Urban Redevelopment Authority (URA) showed that private residence rates climbed up 0.9% in Q2 2021, which is much slower compared to the 3.3% walk signed up in the previous quarter. On a yearly basis, private house prices increased 7.3%.

Christine Sun, Senior Vice President of Research and Analytics at OrangeTee, noted that this marks the market’s 5th consecutive quarterly increase. The walking in prices in Q2 2021 was primarily driven by non-landed homes within the Outside of Central Region (OCR) which climbed 1.8% quarter-on-quarter. Rates climbed the fastest in OCR given that it has the leanest supply of new residences.

Another reason why prices have remained high in Singapore is the relatively high demand for its housing stock. Singapore is a leading nation in Asia when it comes to constructing and maintaining high quality commercial and residential property. Because the demand for these properties is high, many property developers have expanded their business aggressively in order to meet this growing demand. When the demand for property increases, so does the supply of property for sale, resulting in increased Singapore property prices.

A recent study by the finance industry specialists at Citibank showed that residential property prices in Singapore have increased approximately forty percent since last year. The report also indicated that this growth was expected to continue and was outpacing other Asian countries, including India and China. Some analysts believe that the recent growth is due to a number of factors including the opening of a thirty-seven new islands in the country, a growing economy, the introduction of a Goods and Services Tax and the opening of the Cosco ferry linking Singapore and Hong Kong. These factors combined, experts believe that over the next three years, Singapore property prices will continue to increase on a steady basis.

While the demand for property in Singapore has significantly increased over the last twelve months or so, there is still a great deal of development that is planned for the city-state. This new development is being done to support an increased demand for property prices, as well as the increased productivity that is required in the world today. While the recent growth in the country is causing residential property prices to increase, there are still a number of developments still on the drawing boards that are expected to create more jobs and increase the overall demand for property in Singapore. If current trends continue, we should start to see some more interesting residential property prices in the country in the near future. However, investors need to be aware that they could lose their appetite for investing once the market starts to stabilize again.

Price increment for the Rest of Central Region (RCR) was less considerable at 0.3%, down from the 6.1% growth uploaded in Q1 2021. At the same time, the Core Central Region (CCR) tape-recorded a 0.6% boost.

Rate development for landed homes was also slower at 0.8%, compared to the previous quarter’s 6.7% rise.

“After a solid run-up costs in Q1 2021, some landed homeowner have elevated their asking rates, putting them unreachable of some buyers, causing a pullback as well as slower cost gains in Q2 2021,” said Huttons Asia CEO Mark Yip.

Sunlight connected the slower speed of rate growth to fewer brand-new launches throughout the Phase 2 Heightened Alert duration and also less supply of brand-new homes due to building delays and also labour problem.

“As resale houses developed a greater proportion of purchases last quarter, the total consumer price index was taken down by the reduced prices. According to caveat data from URA, 60.5% of landed and non-landed homes were resale residences, more than the 56.6% in the very first quarter of this year,” she added.

Over at the HDB resale market, rates boosted 2.8% in Q2 2021, lower than the 3% walk registered in the previous quarter, revealed flash price quotes from the HDB.

“The slower cost increase could be due to reduced quantity as well as resistance in the direction of paying much more in money over evaluation (COV) among customers,” claimed Yip.

Actually, purchase quantity throughout Q2 2021 is approximated to be 8% less than the previous quarter.

“Almost all 26 communities saw reduced negotiated quantity in Q2 2021 besides Bukit Merah, Choa Chu Kang as well as Marine Parade,” shared Yip.

“The lower quantity is due to the constraints troubled viewings during Phase 2 (Heightened Alert),” he said, keeping in mind that there is usually keen interest for resale flats amid delays in conclusion of brand-new houses.

He included that an overall of 106 HDB apartments were transacted for at least $1 million in the initial half of 2021, compared with 82 such transactions in 2015 and also 64 in 2019.

With this, Yip expects the number of million-dollar flat transactions to go beyond 200 this year.

“While it may make headlines for the transacted value, such deals are less than 1% of the whole year transaction volume,” he stated.

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