19th April to 25th April 2022
Despite the property cooling measures, private home prices continued to increase in the first quarter of 2022, albeit at a much slower pace of 0.7%. HDB resale prices also increased at a slower pace of 2.4% in Q1 2022.
1) Private home prices climb at a slower pace of 0.7% in Q1
Despite the cooling measures, private residential property prices continued to increase in the first quarter of 2022, albeit at a much slower pace of 0.7% compared with the 5% growth seen in Q4 2021, showed Urban Redevelopment Authority (URA) data.
Landed homes led the price hike in Q1 2022, increasing 4.2% quarter-on-quarter “as limited stock, healthy demand for Good Class Bungalows (GCBs), and strong take-up of strata-landed units at new launch Belgravia Ace helped to prop up landed home prices during the quarter”, noted PropNex.
Non-landed private home prices, on the other hand, declined 0.3% quarter-on-quarter, marking its first quarterly drop since Q1 2020.
The Rest of Central Region (RCR) registered the steepest price decline, with prices falling 2.7% in Q1 2022. The Core Central Region (CCR) also saw prices drop 0.1%, while the Outside Central Region (OCR) outperformed, with prices increasing 2.2% from the previous quarter.
“The dwindling unsold inventory of new units in the OCR as well as the healthy demand from HDB upgraders continued to support prices in the mass market,” said PropNex.
On the back of the December 2021 property cooling measures, the lack of major launches, and the Chinese New Year festive lull period, the sales volume of private homes slumped in Q1 2022. However, prices continued to hold steady, even increasing slightly overall, demonstrating a resilient residential property market.
However, Dr. Tan Tee Khoon, Country Manager, PropertyGuru Singapore, believes upcoming RCR project launches, Piccadilly Grand and LIV @ MB, in Q2 2022 should bring more cheer to the market. “The North Gaia Executive Condominium (EC) project is expected to be well-received too,” he adds.
2) HDB resale prices rise at a slower pace in Q1 2022
Resale prices of Housing and Development Board (HDB) flats rose at a slower pace of 2.4% in the first quarter of 2022, compared with the 3.4% growth posted in the fourth quarter of 2021, showed HDB data.
In fact, it is the slowest quarterly growth since Q3 2020 when resale prices climbed 1.5% quarter-on-quarter.
In Q1 2022, a total of 6,934 resale flats were sold, down 12.7% from the 7,940 units shifted in Q4 2021. On an annual basis, resale transactions declined 8.5%.
Analysts attributed the drop in transactions to the seasonal lull and tight supply of flats on sale.
“The delays in completion of new homes in both public and private markets delayed owners’ decision to put their existing flats up for sale,” said Huttons. “The cooling measures and global uncertainties also influenced owners to adopt a wait and see approach before they make their next housing decision,” it added.
Homeowners will have to contend with rising interest rates in 2022 and beyond, with six more interest rate hikes expected this year alone. MAS has already released an advisory to caution households in Singapore to exercise financial prudence.
Dr. Tan Tee Khoon weighs in, “While we will see another bumper crop of about 31,000 flats fulfil their MOP in 2022, prices are likely to trend upwards, albeit at a more measured pace. We are unlikely to observe a repeat of the spectacular price growths set in 2021.”
3) New private home sales rebound 20.7% in March on easing of restrictions
Sales of new private homes, excluding ECs, increased 20.7% to 654 units in March from 524 units in February, according to URA data.
On an annual basis, new home sales dropped 49.5% from 1,296 units in March last year.
“The private residential market showed some signs of recovery as developers sold more homes last month. Sales picked up after the Chinese New Year lull and the easing of Safe Management Measures,” said Christine Sun, Senior Vice President of Research and Analytics at OrangeTee & Tie.
PropNex noted that the Rest of Central Region (RCR) led last month’s sales as it accounted for 49% (320 units) of the total monthly sales. The Outside Central Region (OCR) saw sales bounce back, with 181 units changing hands, or up 11% from February.
Sales in the Core Central Region (CCR) also increased 39.1% to 153 units from the 110 units sold in February.
Currently, demand in Singapore is primarily driven by locals, with foreign buyers taking a more cautious approach to new home sales, shifting only 81 units in Q1 2022, down from 155 units in Q4 2021.
However, with the gradual relaxation of Safe Management Measures, we can expect more foreign buyers to take to CCR residential properties in the days ahead. These investors are likely to make purchases above $5 million as their interests lie in capital preservation, with a preference for properties in Singapore due to the country’s offered stability.
4) 5 Oxley Rise up for sale, offers expected to exceed $300mil
5 Oxley Rise, one of the remaining freehold residential landed sites in District 9, has been put up for sale, revealed marketing agent CBRE.
Consisting of two land plots with a combined area of about 151,205 sq ft, the site houses a two-storey bungalow that served as the residence of various notable figures in Singapore such as Jewish businessman Sir Manasseh Meyer and real estate tycoon Cheong Eak Chong.
Under the 2019 Master Plan, the site is zoned for “Residential (two-storey mixed landed)” use.
“Potential developers and owner-occupiers, therefore, have the flexibility to consider a few residential landed options, such as redeveloping the site to accommodate a single large mansion, a strata or a mixed-use landed development, or multiple Good Class Bungalows (GCB), subject to approval from the relevant authorities,” said CBRE.
Michael Tay, CBRE’s Head of Singapore Capital Markets, expects the site to attract offers in excess of $300 million. The tender for 5 Oxley Rise closes on 8 June.
5) Lakepoint Condominium relaunched for collective sale, price unchanged at $640mil
Lakepoint Condominium in Jurong has been relaunched for collective sale with its reserve price unchanged at $640 million, revealed exclusive marketing agent PropNex Realty.
This works out to a land rate of around $959 to $982 per sq ft per plot ratio (psf ppr), including the development charge as well as the lease top-up premium from JTC.
Previously launched for tender in October 2021, the development occupies a 562,286 sq ft site that is zoned for residential use under the 2019 Master Plan with a plot ratio of 1.4.
The owners of Lakepoint Condominium had recently obtained URA’s approval for higher height redevelopment, enabling the prospective buyer to build a mix of five-storey and 12-storey residential blocks, greatly enhancing the attractiveness of the site.
The tender for Lakepoint Condominium closes on 8 June.
6) Mortgage rates to increase a ‘few times’ this year
OrangeTee expects mortgage rates in Singapore to increase by a “few times” this year, on the back of faster inflation growth globally, reported Singapore Business Review.
It noted that global market movements highly influence the city-state’s domestic interest rates. As such, the US Federal Reserve has announced plans to raise interest rates up to six more times this year.
However, the majority of flat owners in Singapore may not be too adversely affected by the interest rate hikes since the government has already set up safeguards such as adjusting the total debt servicing ratio (TDSR) and mortgage servicing ratio (MSR).
“The impact of the interest rate hikes is dependent on various factors like the loan quantum and the investment portfolio of a buyer… Although more buyers are taking loans from private institutions in recent years, the loan quantum for most flats is not large,” said OrangeTee.
7) Locals make up 80.3% of home buyers in Q1 2022
Singaporeans accounted for 80.3% of the residential property buyers in the first quarter of 2022, while permanent residents made up 16.3% and foreigners 2.9%, reported Singapore Business Review citing Huttons Asia.
Huttons also revealed that homes valued under $1.5 million made up 41% of the total transactions in Q1 2022. Homes valued above $2 million made up 35.7%, while those between $1.5 million and $2 million accounted for 23.3%.
Meanwhile, ECs continued to attract buyers as an alternative to private living even as no new EC project was launched in Q1 2022. In fact, more than 32 ECs were shifted in Q1 2022, taking the unsold stock to 18 units as of March 2022.
Related article: Executive Condo Singapore (2022): 4 Upcoming ECs We Can Expect
As we transition to living with COVID-19 as an endemic, buying preferences for bigger homes and properties located in the OCR are expected to endure. The OCR and RCR are expected to remain price drivers for H2 2022 in the private property market. OCR non-landed private properties hit the sweet spot between size and price point (of between $1 million to $1.5 million).
8) Singapore office space prices up 4.4% in Q1, retail space prices drop 1.4%
Prices of office space in Singapore increased 4.4% in Q1 2022, reversing the 1.8% decline seen in Q4 2021, showed URA data.
Office rents also grew 1.6%, continuing the 0.9% hike posted in the previous quarter.
Island-wide office space vacancy rate, however, remained unchanged at 12.8%. This comes as the amount of occupied office space declined by 13,000 sq m (nett) in Q1 2022.
Meanwhile, prices for retail space dropped 1.4% in Q1 2022, reversing the 1.9% growth posted in the previous quarter. Retail rents also dipped 0.4% in Q1 2022, also a reversal of the 0.6% increase in Q4 2021.
As at Q1 2022, island-wide vacancy rate for retail space expanded to 8.3% from 8.1% in the previous quarter as the amount of occupied retail space fell by 12,000 sq m (nett).
9) Prime retail rents to grow 2% to 4% in 2022
Knight Frank expects prime retail rents in Singapore to increase between 2% and 4% for the whole of 2022 amid new optimism brought by the easing of restrictions.
It noted that dark clouds are “finally receding and the retail sector has reached a turning point”.
It added that the Vaccinated Travel Framework, which allows international travellers to enter the city-state without quarantine, will help increase activity at all retail destinations, particularly the Central Area.
“Unless new variants emerge and threaten the road to recovery, retail rents should bottom out in Q2 2022 before improving in the latter half of the year,” it said.
In Q1 2022, a moderation in the pace of rental decline was witnessed, with island-wide prime retail rent falling by an average of 5.4% year-on-year, compared to the 5.8% year-on-year drop posted in Q4 2021.
Cheryl Chiew, Digital Content Specialist at PropertyGuru, edited this story. To contact her about this story, email: firstname.lastname@example.org.