Home prices stable on 'genuine' buyer demand

Sharp supply drop in Q3 is no cause for alarm given it came after a record supply spike in Q2.

Despite a sharp decrease in condo supply in Q3, home prices are expected to remain stable thanks to the healthy demand from “genuine” buyers, reports real estate portal PropertyGuru.

Non-landed private residential listings dropped by 32.7% in Q3 compared to Q4, as pent-up demand cleared inventory build-up following resumption of property-related activities in July and August.

New launch projects continue to be in demand, with developer sales hitting new highs over the last three consecutive months. September eventually closed with 1,329 new home sales, a 5.6% increase from August’s 1,258 deals, noted PropertyGuru.

Despite a sharp decrease in supply, the PropertyGuru Property Price Index (SPPI) only saw a slight gain of 0.41%. The real estate portal noted that this is likely due to the market being driven by demand from “genuine” buyers.

“The government’s macroprudential property cooling measures are proving effective in weeding out speculators,” the report noted.

The sudden fall in supply is also no cause for alarm given that it comes after a record 46.39% spike in Q2.

“Nonetheless, the observed trend is encouraging, suggesting a healthy take-up rate in the market,” said Tee Khoon Tan, country manager, PropertyGuru Singapore.

Furthermore, the surge in home sales in these months is likely an overspill from the previous quarter as transactions now take over a month to complete, with new safe distancing measures in place.

However, although genuine demand is somewhat resilient, buyers are observed to be more cost-conscious amidst the recession. Six out of 10 of the top-selling projects were in the Outside of Central Region (OCR), and almost 40% of the properties transacted were in the $1m to $1.5m price range.

“Although the market sentiment is slowly improving as the spread of COVID-19 in Singapore is coming under control and the number of daily cases is dwindling, sellers and developers remain cautious. There seems to be no panic or distressed selling, but current properties on the market are priced at reasonable values to sell,” the report observed.

The steady increase of new home sales in the past few months may also be tied to post-COVID hopes of buyers.

“In the current climate, uncompleted properties may seem more appealing to buyers as the general sentiment is that the economy would have recovered considerably by the time the construction of these projects is completed,” said PropertyGuru.

Looking forward, there may be an observed softening in the market due to the new policy by the Controller of Housing (COH) on the reissue of purchase options, but it will likely be a short-lived knee jerk reaction, the real estate portal said.

The massive market of HDB upgraders—around 20,000 units reaching their Minimum Occupation Period— will further fuel demand into 2021 given the low interest rate environment as well as their access to funds after turning a profit from the sale of their flat.