Analysts explain increase of private home prices in Q3 22

Home prices grew 3.8% from 3.5% in the previous quarter.

Real estate analysts said the acceleration of private residential prices increase in the third quarter (Q3) of 2022 stemmed from new launches and strong sales in the suburbs.

The government data showed that home prices in Q3 2022 grew 3.8% quarter-on-quarter.

According to Colliers, prices are now 8.2% year-to-date and 23.5% from the recent trough in Q1 2020 to reach a historical high.

PropertyGuru echoed the sentiment, adding that it found the biggest spike in new launches Outside of Central Region.

"The major Q3 2022 new condo launches – Lentor Modern, AMO Residence, and Sky Eden @ Bedok – were launched above $2,000 PSF and performed well, making the bulk of new non-landed home sales for the quarter," it said.

Sales volume down

With prices going up, transaction volumes begin to decrease to 3,719 resale transactions from 4,236 in the previous quarter.

PropertyGuru said it could be due to the increasing interest rates and driving up borrowing costs.

"The OCR and Rest of Central Region (RCR) saw the biggest drops in transaction volumes," it said.

Homebuyers' attitude

Knight Frank said homebuyers will likely continue to be active during home launches in the next few months of 2022.

These homebuyers are likely on the lookout for a new developing home and hope to make a purchase before interest rates rise further.

"Despite this, the mix of cooling measures just nine months apart, a possible recession in 2023, widespread inflation, and the manner in which private home prices have climbed in the last two-and-a-half years, will inevitably start to shift the sentiment of some homebuyers into tentative territory as interest rates progressively rise from now and into 2023," it also warned.