DESPITE the ongoing pandemic, private residential prices in Singapore went up by 0.3% in the second quarter, marking a reversal from a flash estimate in early July which had the private residential property index falling by 1.1%.

The 0.3% figure comes after a 1% decline in Q1, according to the latest report from the Urban Redevelopment Authority.

Prices of landed properties remained unchanged in Q2, versus a 0.9% decrease in Q1, while prices of non-landed properties edged up 0.4%, led by the core central region (CCR). In comparison, non-landed properties slid 1% in the previous quarter.

By location, prices of non-landed properties in the CCR rose 2.7% in Q2, reversing from a 2.2% decrease in the previous quarter. Meanwhile, prices of non-landed properties in the rest of the central region fell by 1.7%, sharper than the 0.5% decrease in the previous quarter. Outside the central region, prices went up marginally by 0.1%, compared with the 0.4% decrease in the previous quarter.

Commenting on the reversal from the flash estimate, Knight Frank Singapore’s head of research Leonard Tay said: “This surprising turnaround in fortunes was mainly due to pent-up demand observed in the later half of June as show flats were opened – albeit with safe distancing precautions – as well as viewings being allowed under stringent conditions.” He noted that overall prices of private residential homes came down by 0.7% for H1 2020 – a “very mild decline considering the unprecedented pandemic and economic disruption”.

Resales accounted for 35% of all private homes sold in the second quarter. They numbered 933 units in the quarter when the “circuit breaker” took place, down sharply from 2,080 units in the first quarter.

“The secondary market transaction volume contracted more than that in the primary market in the April to June quarter this year,” highlighted Nicholas Mak, head of research and consultancy for ERA Realty.  Including sub-sale units, 951 private homes exchanged hands in the resale and sub-sale markets, plunging about 45% from the prior quarter, he went on to add. “The secondary market volume in Q2 2020 was also the lowest since the Asian Financial Crisis, when 644 units were transacted in the secondary market in Q1 1998.”

Developers sold 1,713 private residential units (excluding executive condominiums or ECs) in Q2, with 18 sub-sale units making up the balance. In comparison, developers sold 2,149 units in Q1.

The vacancy rate of completed private residential units (excluding ECs) remained flat at 5.4% at the end of Q2.

Some analysts expect transaction volumes and prices for private homes to come down this year owing to the ongoing pandemic and economic recession, although factors such as the low interest rate environment and the various packages rolled out by governments and central banks worldwide should counter some of the fallout.

Christine Sun, head of research and consultancy for OrangeTee & Tie, reckons prices will soften in the coming months and expects overall prices may fall up to 5% this year. Meanwhile, 14,500 to 16,800 private homes could be transacted this year, of which new home sales may account for 7,500 to 8,500 units, by OrangeTee’s calculations. Last year, 9,912 new private homes were sold.

Rentals of private residential properties decreased by 1.2% in Q2 after increasing 1.1% in the previous quarter. Rentals of landed properties fell 2.3%, while rentals of non-landed properties declined by 1.1%.

At the end of the quarter, there was a total supply of 49,090 uncompleted private residential units (excluding ECs) in the pipeline with planning approvals, compared to 48,868 units in the previous quarter. Of these, 27,977 units remained unsold at the end of Q2, compared with 29,149 units in the previous quarter.

After adding the supply of 3,613 EC units in the pipeline, there were 52,703 units in the pipeline with planning approvals. Of the EC units in the pipeline, 1,899 units remained unsold. In total, 29,876 units with planning approvals (including ECs) remained unsold, down from 31,099 units in the previous quarter.

There is a potential supply of 5,400 units (including ECs) from government land sales sites that have not been granted planning approvals yet.

Source: Business Times (click here)