1 October 2021: Private residential prices kept rising

Private residential price index
The flash estimates of the private residential price index continue to increase by another 0.9% quarter-on-quarter (qoq) in 3Q 2021. After surging 3.3% quarterly growth in the first three months of this year, the rate of price growth returned to a more sustainable rate in 2Q and 3Q 2021. The price expansion of private housing in the July to September quarter was primarily led by property prices in the landed housing market and the city-fringe non-landed segment with the 2.5% and 2.2% qoq growth respectively. Meanwhile, the non-landed property price indices in the Core Central Region (CCR) and Outside Central Region (OCR) dropped slightly by 0.6% and 0.2% qoq respectively. While there was no major residential development that was launched in the cityfringe area last quarter, the property price growth in the Rest of Central Region (RCR) could be fueled by price hikes in some existing launched residential projects. For example, the median transacted prices of major condominiums in the RCR, such as Normanton Park, Ki Residences at Brookvale and Avenue South Residences increased in 3Q 2021 compared to the transacted prices in the second quarter. Since these condominiums were also some of the top-selling projects in 3Q 2021, their price increases would influence the RCR non-landed price index.

According to the reported number of housing units sold, the best-selling project of 3Q 2021 was Pasir Ris 8, which is located in the OCR. This project attracted much media attention when it was launched in July 2021. While some people might have the impression that the units at Pasir Ris 8 were sold at prices as high as $2,000 psf, such units were in the minority. The median transacted price of Pasir Ris 8 in 3Q 2021 was $1,627 psf. Meanwhile, the overall median new sales price in OCR for non-landed properties (excluding EC) from July to September 2021 was $1,617 psf, only $10 psf lower than the median prices of Pasir Ris 8.

The CCR price index for non-landed private housing decreased the most among the three market segments in 3Q 2021. This could be due to some developers deploying a different strategy compared to RCR condominiums. Foreign homebuyers usually contribute significantly to housing demand in the CCR. Amidst the border restrictions, developers of some new luxury condominiums lowered the prices of their projects to attract local buyers and increase sales. For example, the median price of Leedon Green, which was the best-selling CCR project in 3Q 2021, was 2% lower in 3Q 2021 compared to 2Q 2021. It also shows that some local buyers were waiting to acquire prime residential properties when the opportunities became available. 

Outlook

The fourth quarter is usually a lull period, but residential property prices could continue grow at the current pace. This could bring the overall private residential price index to end this year with a 5% to 7% annual rate of growth, which will be higher than the 2.2% property price increase in 2020. In 2022, property prices could continue to increase, partly driven by cost factors, such as higher land cost and construction cost. As a result, developers would have to launch their new projects at higher prices. This would also have an inflationary influence on the prices of resale properties.