Pent-up demand lifted Singapore's residential market

The number of condo listings jumped 51,359 in Q2 from a weaker Q1.

Despite limits imposed by the Circuit Breaker period during the most of Q2, pent-up demand gave the local property market a rebound when showflats reopened in June, PropertyGuru reported.

According to its market index Q3, the second quarter eventually closed with a slight gain, registering a 2.15% increase to 111.9 points. In line with this, PropertyGuru’s Supply Index saw a record-high 46.39% surge, driven by a pool of sellers in the resale market who are keen to let go of their properties.

Q2 saw 162,069 listings, compared to 110,710 in Q1. The 51,359 jump in listings indicated a peak in supply that surpasses all previous quarters' numbers since records began in Q4 2016, the report said.

It also added that there was a relatively higher proportion of new launch condominiums sold in Q2, as many expect the economy to recover by 2022 to 2023 when most of these projects are slated for completion.

These trends align with the Urban Redevelopment Authority's (URA) data, which noted a 0.3% price increase in the private residential market despite earlier estimates of a 1.1% fall in the property price index.

Meanwhile, PropertyGuru’s Price Index showed that condo prices rose marginally by 2.15% to 111.9 QoQ. “However, underlying the apparent increase in the price index is an anomaly that should be highlighted, as the proportion of resale properties transacted in the last quarter is significantly lower (only 35% of the total transactions),” it added.

This is likely due to the prohibition of physical viewings that has a larger impact on completed properties than new launches. The quarterly average proportion of resale transactions to total transaction volume (new sale, sub sale and resale combined) for the preceding four quarters is at 46.9%.

“Hence, it is our view that the primary market figures have buoyed the overall price index despite considerable price pressures in the resale market,” PropertyGuru said.

It further noted that only seven out of 28 districts, namely 8, 9, 10, 13, 17, 22 and 28, recorded a decline in property prices over the second quarter.

The median per square foot asking prices in Orchard and River Valley got back to the list of districts with the most severe price declines. PropertyGuru expects these areas to face more headwinds in the coming quarters with significantly higher supply numbers.

“At this stage, it appears that the man on the street is yet to feel the complete brunt of COVID-19’s economic impact as the government stimuli continue to prop up businesses and employment numbers. However, as discretionary spending goes down and household budgets tighten, the next few months of transaction data might see phased trimming or even require an extension of the temporary relief measures for the property market,” the report added.