Private home prices spike 10.6% y-o-y in FY2021, highest yearly increase in 10 years

SINGAPORE (EDGEPROP) – The private residential market saw a surge in home prices last quarter, jumping 5% q-o-q according to the latest flash estimate of the price index by the Urban Redevelopment Authority.

The latest quarterly report is a sharp increase compared to the 1.1% q-o-q increase that was registered by the private residential market in 3Q2021.

For the whole of 2021, the price index for the private residential market increased by 10.6% y-o-y, which is the highest annual increase since FY2010 when prices spiked by 17.6% y-o-y.
“Aspiration to own or invest in private homes has remained strong, despite cooling measures and pandemic uncertainties, but aided by a low-interest rate environment,” says Ong Teck Hui, senior director of research & consultancy at JLL.

He adds that the 5% jump in private home prices in 4Q2021 was likely due to keen demand from buyers and optimistic pricing by developers, and it contributed to “robust price increases across all market segments,” he says.

Price surge was stronger than expected

According to Ismail Gafoor, CEO of PropNex Realty, the price increase last quarter was stronger than expected and was driven by firmer launch prices at new launches in the CCR and RCR.

For example, based on caveats, CanningHill Piers in Clarke Quay emerged as the best-selling project last quarter, shifting 582 units at an average price of $2,937 psf, while Jervois Mansion sold 101 units at an average price of $2,578 psf.

Other previously launched projects such as Normanton Park, The Avenir, and Leedon Green also continued to move inventory last quarter. “Policy makers would have anticipated the substantial price increase in 4Q21, which resembles pre-cooling measures quarterly price trends in 2010. This is likely to have contributed to the decision to tighten cooling measures from 16 December 2021,” says Ong.

He adds that the recent property cooling measures introduced on Dec 16, 2021, are likely to result in some easing in the market as many sellers and buyers hold back purchases to reassess the situation, and this could lead to some moderation in transaction volume in the short-term, he says. “In hindsight, seeing the robust price increase in the last quarter and overall in 2021, we think the government’s move to introduce the new cooling measures on 16 December was a timely one, which will put the brakes on what could be a fast-accelerating price growth,” says Gafoor.

PropNex Research estimates that for the whole of 2021 new home sales could hit 13,000 units while the private resale market could clock in 19,000 units sold. However, this year, new home sales could taper to 9,000 to 10,000 new units and 15,000 to 16,000 resale units sold.
However, Ong does not expect prices in the private residential market to decrease in 2022 as new launches continue to move units and the current unsold inventory is low with about 17,000 unsold units left.

“There is therefore less pressure for developers to reduce prices, especially if they are in a healthy financial position. However, price growth of private homes is expected to be moderated due to the cooling measures, rising 2% to 4% in 2022,” says Ong.
Robust price increases across all segments

Based on the flash estimates, the Rest of Central Region (RCR) recorded the largest increase in the price index, climbing 7.3% in non-landed home prices. This is this highest quarterly increase in this segment since 1Q2010 when the RCR non-landed price index rose 7.8% at that time.
The overwhelmingly successful launch of Canninghill Piers in November 2021 was a major contributor to the jump in RCR prices last quarter. The new project sold 582 units at a median price of $2,886 psf.

Non-landed home prices in the suburbs, or Outside Central Region (OCR), recorded a robust 5.4% price increase in 4Q2021. “Affordable prices in this market segment attracted buyers, including many HDB upgraders. HDB upgraders have benefitted from a buoyant HDB resale market,” says Ong. (Find HDB flats for rent or sale with our Singapore HDB directory)

The HDB market saw resale prices increase by about 12% for the whole of 2021, based on the latest URA flash estimates.

Price increase in the OCR were likely led by successful sales at new launches such as The Commodore, which sold 164 units at a median price of $1,511 psf, and Dairy Farm Residences, which moved 153 units at a median price of $1,657 psf.

Meanwhile, home values in the Core Central Region (CCR) grew 2.5% q-o-q in 4Q2021.

The landed home market also saw a jump in home prices last quarter increasing by 3.7% q-o-q. Overall, this segment recorded a 13.1% y-o-y price increase.
Uncertainties and new launches in 2022

According to Nicholas Mak, head of research & consultancy at ERA Realty, various market forces could influence residential real estate prices to move in different directions this year.
“Factors such as the expected economic recovery, continuing government actions to save and create jobs, and the possible arrival of more foreigners to work, study and live in Singapore will have a positive impact on real estate prices and demand,” says Mak.

Meanwhile, the tighter property market curbs, possible interest rate hikes, and the ongoing effect of the pandemic could weigh down the property market this year. “Among all these factors, the latest round of cooling measures is the main influence that would greatly increase the level of uncertainties in the local property market,” says Mak.
Lee Sze Teck, senior director (research), Huttons Asia, expects up to 43 launch-ready projects in the pipeline this year. This includes two Executive Condo (EC) launches – North Gaia in Yishun and another EC project along Tengah Garden Walk. Another EC project along Tampines Street 62 could launch in 1Q2023. 

Belgravia Ace is expected to be the first new launch in 2022. The strata landed development is by Tong Eng Group. (Picture: Samuel Isaac Chua/The Edge Singapore)
New launch projects in 1Q2022 include Belgravia Ace off Ang Mo Kio Ave 5, Kovan Jewel on Kovan Road, Royal Hallmark on Haig Lane, and The Arden on Phoenix Road.
“The market remains supply led. The lower volume of homes (that could) launch for sale in 2022 will result in lower new home sales. The new home market may see sales between 8,000 and 9,000 units while prices may move up to 3% in 2022 on the back of higher construction costs,” says Lee.

Compare listings