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- URA price index rose 1.5 per cent quarter-on-quarter (q-o-q), posting its first increase since the cooling measures were implemented in July 2018.
- The demand for new homes surged 27.9 per cent last quarter. New home sales rose in H1 2019 when compared to the same period last year.
- The secondary market saw a revival of buying interest as the number of resale homes sold rose 27.6 per cent q-o-q.
- Private home purchase by foreign buyers rose substantially last quarter.
- Rentals of private homes including ECs rose 1.3 per cent q-o-q.
Foreign buyers returning to the luxury home segment
Singapore’s property market has performed well in the first half of this year despite the cooling measures and slowing GDP growth. Foreign investors have been streaming back to the market, while well-heeled investors have snapped up luxury homes in the second quarter of this year.
A ‘flight-to-safety behaviour’ has taken dominance among some investors as they choose to adopt a more defensive investing stance in light of the growing economic uncertainties and geopolitical conflicts. Singapore has been cast in the spotlight given its strong reputation as a safe haven for property investments. Historically, prices of properties here have risen over the past decades and weathered through some of the toughest economic challenges and regulatory curbs.
The second quarter has seen a steady recovery of home prices and demand one year after the cooling measures. The URA price index rose 1.5 per cent q-o-q, posting its first increase since July 2018. New home sales rose 27.9 per cent q-o-q to 2,350 units in Q2. A total of 4,188 new homes were sold in H1 2019, 6.1 per cent more than the 3,947 units sold y-o-y. The secondary market saw a revival of buying interest with 27.6 per cent more resale homes being sold q-o-q. The robust sales indicate that the demand for private homes is healthy.
TRENDING: RETURNING INTEREST FROM FOREIGN BUYERS
While Singaporeans formed the lion’s share of property purchasers, the number of non-landed homes bought by foreigners (non-PR) have also increased last quarter. Based on URA Realis data, 78.1 per cent of non-landed homes (all sales types) were bought by Singaporeans. 5.9 per cent of all non-landed homes or 249 units were bought by foreigners (Chart 1). This is the first quarterly increase seen since the cooling measures in July 2018. Mainland Chinese are the top foreign buyers last quarter, followed by buyers from Malaysia, India, Indonesia and the USA (Chart 2).
INCREASE IN WEALTHY MAINLAND CHINESE BUYERS
The proportion of non-landed homes bought by Mainland Chinese have increased from 19.3 per cent in H1 2018 to 25.9 per cent in H1 2019 (Table 3). The proportion of non-landed home purchases in RCR and OCR have decreased over the same period. This may indicate that the proportion of Mainland Chinese who can afford pricier homes in the luxury segment has increased.
Last quarter, 22.6 per cent of new non-landed homes and 43.6 per cent of resale homes in CCR bought by Mainland Chinese were more than S$5 million (Chart 3).
The most popular districts where Mainland Chinese bought homes (all sales types) were District 19, District 3, and District 9 (Chart 4).
According to URA realis data, the average price of new sales in CCR surged 10.5 per cent from S$2,728 psf in Q1 2019 to S$3,014 psf in Q2 2019 (Chart 5). Price of resale condos rose at a slower pace of 1.3 per cent over the same period.
The significant price increase of new home sales could be attributed to more super-luxury homes being sold in the reviewed quarter. In Q2 this year, 37 units at Boulevard 88 were sold at an average price of S$3,736 psf while 27 units at 3 Cuscaden were transacted at S$3,584 psf.
Last quarter has also seen the sixth most expensive new condo by per sq foot sold since 1995 (Chart 7). A 28th floor unit (562 sqm) at Boulevard 88 was transacted in June for a record-smashing S$5,125 psf. By quantum, this unit was transacted at S$31 million, which is the 5th most expensive new sale condo ever transacted. The 7th most pricy new sale was another 28th floor (560 sqm) unit at Boulevard 88 transacted in April for S$29.5 million or S$4,899 per sq foot.
As demand for luxury homes had risen substantially in recent months, overall sales volume in CCR rose for a second consecutive quarter, from 563 units in Q1 to 615 units in Q2 this year (Chart 6).
According to URA realis data, the average selling price of new homes surged 15.3 per cent from S$1,725 in Q1 2019 to S$1,989 psf in Q2 (Chart 8). This is the sharpest price increase seen over the past four years.
Many new projects have breached the S$2,000 psf benchmark for new homes in RCR including Amber Park that was sold for an average price of S$2,481 psf and Sky Everton at an average price of S$2,525 psf (Chart 9). Despite the higher per sq foot pricing, sales have been healthy at both projects as 156 units were sold at Amber Park while 133 units were moved at Sky Everton in Q2 2019.
As a result of the stellar sales, sales volume surged 84.8 per cent from 623 new homes in Q1 to 1,151 new homes in Q2 this year. Including resales and sub-sales, non-landed home sales rose 55.4 per cent from 1,105 units to 1,717 units q-o-q (Chart 10).
Demand for mass-market condos rose a third consecutive quarter. According to URA realis data, sales volume increased by 9.2 per cent q-o-q from 1,720 units in Q1 to 1,879 units in Q2 (Chart 11). Sales volume rose for both the resales (773 units in Q1 to 873 units in Q2) and new sales markets (919 units in Q1 to 978 units in Q2).
The average selling price of new homes in OCR increased q-o-q to S$1,433 psf from S$1,399 in the previous quarter, while the average selling price of resale homes held steady at S$1,055 psf in Q2 (Chart 12).
The best-selling new projects in the reviewed quarter include Treasure at Tampines (168 units) that was sold at an average price of S$1,325 psf, The Florence Residences (145 units) at S$1,444, Riverfront Residences (110 units) at S$1,314 psf, Parc Komo (105 units) at S$1,507 psf and Parc Botannia (92 units) at S$1,301 psf.
The affordability threshold of buyers continued to rise such that the majority of homes were bought at S$1 million and above (Chart 13). In Q2 2019, 60.0 per cent of condos were sold at S$1 million and above, while 3.7 per cent were above S$2 million.
According to URA data, rents of private homes rose 1.3 per cent in the second quarter of this year compared to a 1.0 per cent increase in the preceding quarter.
Rents for non-landed homes increased across all market segments, led by CCR (1.5 per cent), followed by RCR (1.4 per cent) and OCR (1.2 per cent).
According to URA realis data, the number of leasing transactions rose 4.4 per cent q-o-q and 2.2 per cent y-o-y (Chart 14).
Overall occupancy rates fell marginally by 0.1 percentage point to 93.6 per cent last quarter (Chart 15). Occupancy rates fell in CCR (-0.2 percentage points) and OCR (-0.3 percentage points) but rose slightly in RCR (0.4 percentage points). The rental market is still healthy, considering that occupancy rates across all market segments are still above 90 per cent.
OUTLOOK FOR H2 2019
Both the URA price index and new home sales volume for the first half of this year is still within our earlier forecast (Table 5). For H1 2019, overall home prices increased 0.8 per cent while new home sales volume (excluding ECs) has reached 4,188 units which is well within our earlier projection for the year.
If the global economy does not deteriorate further and the job market remains robust, we foresee that demand for new homes may reach between 9,000 and 10,000 units for the whole of 2019, while prices may continue to trend up between 1 and 3 per cent for the full year.
While there are many projects slated to be launched in the coming months, there could be a supply crunch from 2021 as collective sales were brought to a halt after the latest cooling measures and the government has scaled down the number of land parcels slated to be released under the H2 government land sales programme. Therefore, this maybe a good opportunity to snag a good buy before the potential demand outstrips supply in two years’ time.