SINGAPORE, Aug 10 — Private condominium resale prices hit a record in July, growing by 1 per cent compared with the previous month despite the tighter Covid-19 measures in the second half of July, according to flash estimates released today.
On a year-on-year basis, overall resale prices grew by 8 per cent in July, advance data released by property portals 99.co and SRX showed.
A unit at Le Nouvel Ardmore in Tanglin was sold for S$18.5 million, which was the highest resale price of a condo unit in July.
An estimated 1,817 condo units also exchanged hands in July, about 22.5 per cent more than the 1,483 sold in June.
The volume of resale transactions in July was 68.2 per cent higher than in the same month last year, and 83 per cent higher than the average number of transactions seen in July over the past five years.
Property watchers said the higher prices of resale condos were reflective of Singapore’s counterintuitive real estate boom amid the pandemic, including the rising prices seen in the Housing and Development Board (HDB) resale market as well as the higher launch prices for recent new condominiums.
What the data shows
While the prices of resale condos have been climbing steadily since July last year, the total number of resale transactions have been falling over the past three months.
July’s preliminary data, however, shows that the market may have reversed this decline in transaction volume.
Mark Yip, chief executive officer of realtor Huttons Asia, said: “Despite the curbs on viewings from July 22, transaction volume in July resumed to the level in March and April where there were no restrictions.”
There were 1,901 resale transactions in March and 1,992 transactions in April.
The worsening Covid-19 situation in July had prompted the authorities to lower the cap for the number of unique household visitors a day from five to two, which had an impact on home viewings. The cap was raised to five unique visitors a day from Aug 10.
Preliminary data showed that more than half (58 per cent) of the 1,817 resale transactions in July came from condos outside the central region (OCR) of Singapore.
Another 17.9 per cent involved resale condos in the core central region (CCR), and around 24 per cent were units in the rest of central region (RCR).
Nicholas Mak, ERA Realty head of research and consultancy, noted that the resale price expansion of CCR and RCR condos were marginal, growing by 0.1 and 0.3 per cent on a month-on-month basis respectively.
“It was the healthy 1.6 per cent month-on-month growth of condominium prices in the suburban OCR that pulled up the overall condo price index,” he said.
Why is this happening
Mak explained that the robust HDB resale market was partly the reason for the increase, especially in these suburban areas.
“Some owners of HDB flats are taking advantage of the high prices of HDB resale flats and cashing out to upgrade to private condos,” he said.
HDB resale prices have climbed around 3 per cent per quarter over the past three quarters, which could be due to the slowdown in the construction of new Build-to-Order flats.
If this trend continues, prices for resold HDBs are likely to post a record high in the second half of 2021.
Mak added that most of the buyers of resale condos in the suburban areas are Singapore residents who are buying them as homes to live in, rather than for speculative investment.
Said Mak: “Hence, an increase in the demand for such suburban housing is a healthy sign as such demand is more sustainable.”
Yip said the surge in resale transactions for the whole of July could also be due to some buyers rushing to complete the deal before tighter social distancing restrictions kicked in on July 22.
He reasoned that buyers could be seeking more affordable options in the condo resale market as opposed to HDB resale and new condos, noting that the prices of mass market homes in OCR condos rebounded in July after easing for two quarters.
Christine Sun, OrangeTee and Tie’s senior vice president of research and analytics, agreed that home buyers could have decided to take the plunge and buy a private property since property prices were “rising across the board”.
She pointed out that the steep 1.6 per cent jump in OCR prices in July compared with June was likely due to the low supply of such units relative to RCR and CCR units.
This meant that on a year-on-year basis, the resale prices of OCR condos have climbed by 7.7 per cent, noted property analyst Ong Kah Seng.
“This is quite a hefty price increase within a year,” he said.
Outlook
Experts said that the resale condo prices could continue to rise in the coming months, since the supply of new private homes continues to be limited.
And with the buoyant HDB resale market likely to remain for some time, HDB upgraders could turn to the private resale market and continue to drive up prices.
Yip said that an estimated 29,000 HDB flats may be resold in 2021, and these sellers may take the opportunity to upgrade. This is higher than the 24,748 HDB units resold in 2020 and the 23,714 units transacted in 2019.
ERA’s Mak said there could be a slowdown in resale transactions in August since people normally avoid closing such deals normally during the Ghost Month but that the rising resale trend will continue in September.
He noted that some developers had recently raised the prices of remaining unsold housing units in their private residential projects following the launch of Pasir Ris 8 condo in late July, which could spillover to the resale condo market.
“In the absence of any government intervention, the SRX resale condo price index would continue to appreciate and could end the year with a 10 to 15 per cent year-on-year increase,” he forecasted. — TODAY
