Private home prices up by 3.2% in Q2: URA

The private home prices index increased to 180.4 points.

Overall private residential property prices rose by 3.2% in the second quarter (Q2) of 2022 compared to the 0.7% increase in the previous quarter, the Urban Redevelopment Authority (URA) revealed in its flash estimate.

Data also showed that the price index for private home prices went up by 5.6 points from 174.8 points in the first quarter (Q1) of 2022 to 180.4 points in Q2 2022.

Per region, prices of non-landed private residential properties in the Core Central Region (CCR) grew by 1.6%, compared to a 0.1% decline in Q1 2022. 

Prices in the Rest of the Central Region soared by 6% but were down by 2.7% in the previous quarter. Prices in the Outside Central Region went up by 1.7%, compared to the 2.2% growth in Q1 2022.

Huttons observed that the price hike this quarter was almost five times that of the previous quarter. It also found that foreigners buying homes doubled from the previous quarter as the economy reopens.

It then raised its forecast for full-year price growth from 3% to 8% in 2022.

Echoing this, real estate expert, OrangeTee, attributed the quick price increase due to the higher number of new homes, which are sold at higher prices. 

“Moreover, new homes constituted a higher proportion of the total sales last quarter. New home sales made up 39.2% (2,258 units of 5,762 units) of total sales volume in Q2 2022, up from 33.9% (1,776 units of 5,243 units) in Q1 2022,” said OrangeTee in its analysis of the recent URA private home prices index.

In its outlook, OrangeTee said the market impact for home prices will rely on the tightening of the total debt servicing ratio (TDSR). 

“As the TDSR (Total Debt Servicing Ratio) threshold for property loans uses a stringent 3.5% interest rate computation, there should be sufficient buffer for rates to move before monthly mortgage obligations exceed borrowers' gross monthly income,” the real estate analyst said.

“Currently, eligible borrowers have the option to take a floating rate package which is still below 2%. However, should interest rates edge towards 3.5%, the TDSR may be revised,” OrangeTee added.