Singapore Residential Property Market Report | Quarter 2 2022 Update

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The total number of new home transactions in the private residential market in April 2022 is the same as the previous month, decreasing by 0.2% to 653 units. In March, the total new home transactions is 654 units, which is 1 more than April. This data exclude Executive Condominiums (ECs).

In May, the total monthly home sales crossed 1,000 for the first time this year since December 2021 cooling measures, increasing by 108% MoM and 52% YoY to 1,356 units.

The huge increase was not unusual, given that nearly 80% take up rates at two new major launches in Piccadilly Grand and Liv@MB.

Resale condominium prices rose for the 22nd straight month in May 2022, rising 1.6% month on month and 8.4% when compared to the same month the previous year. growth was led by resale price increases in the outside central region (OCR) and the rest of central region (RCR), where prices rose 0.7% and 0.5%, respectively.

Both regions experienced on-year growth of 5.4% and 10.7%. The majority 60.2 per cent of resale volumes came from OCR, while 24.7% and 15.1% of volumes were transacted from RCR and CCR, respectively

The majority of the transactions continued to be in the city fringes or Rest of Central Region (RCR). The top project is Normanton Park having 52 transactions. This 1,862 units development was the monthly top seller in Quarter 1 2022 and for the past five consecutive months now with only 66 unsold units left which comprises of only 3.5% of the total development.

Looking at the whole of Singapore including ECs, North Gaia executive condominium, a newly launched EC in Yishun, recorded the highest number of sales in a project in April with 166 transactions out of 616 units of around 26%.

As property transactions is usually the highest in Quarter 2 of April to June, April 2022 should be the last month where the market remains in a state of pause, after the announcement of the 15 December 2021 cooling measures.

The Dec 21 cooling measures of generally an increase of 5% ABSD, has cause homebuyers to have a more cautious and “wait-and-see” approach. This has cause the overall transaction volume across Singapore to drop by over 300% but has not affect the Property Price Index (PPI) or the valuation at all. Overall, demand has remain strong with limited stock.

The launch and sales momentum at Piccadilly Grand (80% sold) in May (315 sales in the first weekend of launch) as well as the strong pick up rates at LIV@MB (80% sold) should now encourage developers to start launching projects, as it is clear that there is underlying demand for new product despite the measures.

The fact that there are more buyers than there are sellers was predicted to re-establish buying volume before Q2 2022 ends, even though new sale volume from January to April 2022 is estimated at a mere 2,478 units, just slightly over half of the estimated 4,763 new sales from January to April 2021.

As it stands, there are already some 500 new sales logged for May 2022 with just more than a week of caveats lodged in this uncompleted month. Therefore, in the months ahead, developers will now be encouraged to launch projects to capture what-has-been pent up demand and owner occupier demand before interest rates rise further during the course of 2022. New sale volume should now start catching up and remains on track to reach 8,000 to 9,000 units for the whole of 2022.

This is also the first month since September 2021, where primary sales volume increased in the Core Central Region (CCR) while volumes fell in the Rest of Central Region (RCR) and Outside Central Region (OCR). There were 206 new sales in the CCR, up by 34.6% from the 153 units last month, while primary transactions in the RCR and OCR fell by 9.7% and 12.7% respectively.

It might be too soon to tell, but perhaps the increase in cross border travel volumes and the opening of air lanes has started to lure overseas investors, in spite of the 30% Additional Buyer’s Stamp Duty (ABSD) for foreigners. Some high-net-worth families and individuals will still be lured by wealth opportunities and the eco-system of wealth management in Singapore. This aligns with findings from the Knight Frank Wealth Report 2022, where the luxury market in Singapore was surveyed as the top Asian location of choice among the Asian wealthy when buying a new home. 

Home buyers from China, India, Indonesia, the Philippines, and the United Arab Emirates (UAE) listed Singapore in their top five locations abroad when considering investment homes. The move to the Vaccinated Travel Framework from 31 March 2022 might just be the game-changing measure that opens up the CCR to foreign home buyers who have been waiting out the last two years of the pandemic.

In April 2022, there was already a slight uptick in the volume of foreign purchases, with 93 sales (exclude EC) to foreigners, up from an average of 50 monthly sales in Q1 2022.

Looking forward into the future, URA announced that it will increase residential land supply on the confirmed list for 2H22 Government Land Sales (GLS) programme to 3,505 units, a 26% increase to meet the housing demand and to address low unsold inventory levels.

Likely, the demand will match the supply and prices will be more controlled.

Outlook: The prices of newly launched units in May suggests overall home prices may accelerate in Quarter 2 and track ahead of our forest of 3% growth, raising the risk of cooling measures. Buyer appetite of bigger-ticket units also appears to be increasing, 216 units were sold at above $3m in May 2022, the most over the last 10 years. Sales volume may slow during the next couple of months but likely pick up again in Quarter 3 with the launch of Lentor Modern, AMO Residence and Sceneca Residence at Tenah Merah.

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