Private residential property index up 1.2 points: URA

Non-residential properties are getting a pass from investors and buyers.

The URA flash estimates for price index registered a rise in the third quarter as pent-up demand post-circuit breaker led to a substantial increase in transaction volumes

The index rose 0.8% or by 1.2 points to 153.8 points in Q3 from 152.6 in the previous quarter. This is also a faster rate of quarterly increase from the 0.3% jump recorded in Q2.

This rate of increase  is ‘gravity defying’, said Leonard Tay, head of research of Knight Frank Singapore.

Overall, the index has risen by 0.1% in the first nine months of 2020, despite the year being fraught with pandemic and what will likely be the worst recession in Singapore’s history, Tay noted

He added that the turning point occurred sometime in the second quarter, when the Q2 flash estimate of the Private Residential Price Index decreased by 1.1% quarter-on-quarter (QoQ) on 1 July, only to register an increase of 0.3% by the time the confirmed index number was released some three weeks later on July 24.

“This reversal of fortunes continued to gain momentum in Q3 2020, as pent-up demand led to substantial increases in transaction volume post-circuit breakers,” he said.

Landed housing led the price increase by chalking up 3.8% QoQ, after remaining flat in Q2. Based on URA data as of 1 October, landed transactions in Q2 were tepid at 211 units, or less than 100 sales per month between April and June.

This figure more than doubled to 512 units from July up to 22 September. Majority of landed home sale occurred in the resale market, which is expected given that buyers would have waited post-circuit breaker for viewings of prospects before making a decision, Tay added.

On the other hand, prices of non-landed private residential properties in the Core Central Region (CCR) declined by 4.9% in Q3, in contrast to the 2.7% increase in the previous quarter. Prices in the Rest of Central Region (RCR) climbed 3.3%, whilst prices in the Outside Central Region (OCR) increased by 1.7%.

The Rest of Central Region (RCR) also made a comeback following marginal decreases in Q1 and Q2, with sales of popular project launches such as Forett At Bukit Timah, Daintree Residence at Toh Tuck Road, Jadescape (Shunfu Road) and The Woodleigh Residences at Bidadari.

“At the moment, private residential transactional activity is largely focused in the RCR and OCR fueled in part by HDB homeowners who have recently completed their five-year Minimum Occupation Period (MOP) in BTO Flats, and are looking to sell their units and use the gains to upgrade to the private market. After all, a significant proportion of the 25,183 and the 23,445 HDB homeowners who collected their keys in 2014 and 2015 respectively, would be poised to make this transition,” Tay said.

The strong results led Tay and Knight Frank to change their 2020 prospects, with private home prices now expected to remain unchanged from end-2019 fro the original 5% fall expected for the year.

This is reminiscent of 2009 when the private residential market in Singapore witnessed a fast and furious recovery in the midst of the global financial crisis, where prices and sales volumes rebounded in a time of uncertainty.