Continued rise of condo resale prices won't satiate market appetite: analysts

Monthly volumes of units sold are expected to soon reach a decade high.

Condo resale prices rose for the eight consecutive month, and are predicted to reach a decade high in volumes, according to a report by SRX.

CCR prices increase 1.1% whilst RCR and OCR prices decrease by 0.1% and 0.2% respectively in March 2021. Overall prices increased by 4.2% YoY against March 2020 and 0.1% MoM against February 2021.

The report said that an estimated 1,662 units were resold in March 2021, a 28.9% increase from the 1,289 units resold in February 2021. This is the highest monthly volume seen since May 2011.

Breaking down by regions, in March 2021, 60.2% of the volumes are from OCR, 23.2% from RCR and 16.5% from CCR.

Meanwhile, the highest transacted price for a resale unit in the month is achieved at $18.3m at Eden.

OrangeTee’s senior vice president of research and analytics, Christine Sun said that demand for resale homes in OCR was higher possibly due to a lack of new home supply in the suburban areas and rising new home prices.

From January 2020 to March 2021, there were few mega new launches above 500 units in OCR and seem to be only two mega launches, the 640-unit Clavon and 660-unit Ki Residences at Brookvale. Over the past three months, there have been no mega launches in the OCR, hence some buyers had probably turned to the resale market to find alternative housing, she said.

“Developers have also been paring down the unsold stock for their launched projects. For some of the balanced units, prices seem to have risen recently. thus creating a bigger barrier to entry for many first-time homebuyers or HDB upgraders to buy new private homes,” Sun added.

Sun also said that the rising prices of resale homes may have been pushed by supply and demand factors.

“A recovering economy and still-low mortgage rates may propel demand and prices of resale homes further. As mega launches in the suburban region will continue to be limited, demand for resale mass-market homes may continue to remain robust this year, barring new cooling measures or unforeseen circumstances,” Sun said.

The head of research and content at PropNex, Wong Siew Ying agreed with this sentiment, saying they expect demand for resale condos to remain healthy and largely driven by local end-user demand including from HDB upgraders.

“The wide price-per-square-foot gap between new launches and resale properties may also help to steer some buying interest towards the resale segment. Generally, we do expect some potential upside for resale home values, partly supported by the firm prices in the new launch market,” Wong added.