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Private-home prices in Singapore are on the rise again just one year after the government introduced curbs to cool the market.
Dwelling values jumped 1.5% in the three months through June 30, the steepest gain since the second quarter of 2018 and more than the 1.3% in the government’s earlier flash estimate, according to final data from the Urban Redevelopment Authority released Friday.
The price recovery was mainly driven by apartments in the city-state’s prime central regions. The higher launch prices of new homes are “within expectation due to the higher land cost and many projects commanding a price premium due to their excellent location, freehold status and distinctive designs,” according to Christine Sun, the head of research at OrangeTee & Tie Pte.
The government introduced cooling measures to slow price increases just over a year ago, in early July 2018. They included raising stamp duties for second homes and tightening loan-to-value limits for housing loans granted by financial institutions. The curbs didn’t take long to have an impact, with home prices falling for a second straight quarter in the three months through March 31.
With prices heading north again, market watchers may start to question whether additional restrictions on property buying are required. Minister for National Development Lawrence Wong said in May that Singapore had done what it set out to do and stabilized the property cycle.
In other highlights from Friday’s data release:
- 2Q private home rental index rose 1.3% from the first quarter while the vacancy rate climbed to 6.4% from 6.3% in the previous quarter
- Office-space prices gained 0.9% while rentals rose 1.3%
- Retail-space prices rose 0.4% while retail rents fell 1.5% in the three months
- Developers launched 2,502 residential units for sale in the second quarter versus 2,989 units in the first three months of 2019
- Developers sold 2,350 apartments compared with 1,838 units in the previous quarter
Singapore also has a huge amount of apartments coming online. Outside of the 35,538 unsold units with planning approval, there’s a potential 7,100 apartments to come from government land sales and en-bloc sites.
The oversupply -- at a time of weak demand -- prompted the government in June to cut the supply of private residential units under its land sales program. Now the supply of private housing in the second half, excluding executive condominiums, will be 1,235 units, down 25% from 1,640 units in the first six months of the year.
International Interest
Last quarter also saw an increase in private home purchases by foreign buyers. According to URA Realis data, the number of foreign buyers jumped by 46% quarter-on-quarter, from 173 units to 253 units. As a proportion of total non-landed sales, non-landed homes bought by foreigners rose from 5.1% in the first quarter to 6% in the second.
“The U.S.-China trade tensions and regional geopolitical frictions may have benefited more stable economies like Singapore,” Sun said, noting that many luxury homes are being snapped up by well-heeled investors.
“Property prices in Singapore have been rising steadily through the decades and have weathered through some of the toughest economic challenges and regulatory curbs,” she said.
Independent property analyst Ong Kah Seng agreed, saying “private condos in Singapore are a resilient force to be reckoned with.” Ong added that some families were being drawn to Singapore as opposed to Hong Kong, due to that city’s brewing social unrest.
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