Singapore Home Prices Jump 9% in 12 Months — Set for Double-Digit 2018 Increase

Singapore residential prices rose nine percent on year and are close to all-time highs, according to a flash second-quarter price report issued by the city’s Urban Redevelopment Authority (URA) on July 2nd.

The latest jump in home prices moves the URA’s index of housing costs to within 3.6 percent of its record high, achieved in the third quarter of 2013, while non-landed prices are just 1.7 percent below their high water mark.

The jump in home prices comes amid a broad recovery in the city’s real estate market which has office rents, sales of en bloc projects and land sales boom alongside rising housing numbers.

Colliers Boosts 2018 Growth Forecast by 50%

Following the announcement, property consultancy Colliers International moved its full-year growth forecast for the housing market into the double-digit range.

“With the two strong quarters of price increase, we are now raising our private home price forecast for the full 2018 to 12 percent from 8 percent,” said Tricia Song, Head of Research for Singapore, Colliers International.

The agency’s prediction comes after the URA’s second quarter pan-island residential price index reached 149.0, up 3.4 percent from the first quarter of the year (and up from 136.6 a year earlier). The pace is down slightly from the first quarter, when the quarter-on-quarter rise was 3.9 percent.

The sustained growth seen in the first half of 2018 comes after 1 percent growth full-year 2017 and closely matches the performance of the market during the boom that followed the global financial crisis.

Housing Boom Spreads Across the Island

In the report, homes in the Rest of Central Region (RCR), which excludes high-end residential areas such as districts nine and ten, as well as Sentosa Island, rose 5.7 percent on quarter to 148.6. That jump follows a slow first quarter for the middle class area which saw only 1.2 percent in the first three months of the year. 

Colliers notes that the second quarter number could be somewhat skewed due to unusually strong sales at a few locations. The global property brokerage cites the higher-than-comparables prices achieved at Amber 45, Park Place Residences at PLQ and Margaret Ville.

Prices in the Core Central Region (CCR) property prices, which includes districts nine, ten and 11 as well Sentosa and the downtown core, were up only 1.4 percent in the second quarter, against a 5.5 percent rise in the first quarter. However, the prime residential area is said to have seen only one new condo launch during the period.

Slower growth was also noted in the Outside Central Region (OCR) category, with prices up 2.9 percent in the second quarter versus 5.6 percent in the first quarter. Landed property outperformed non-landed property in the second quarter — recording price growth of 3.8 percent compared to 3.3 percent. 

New Supply, Cooling Measures

While the outlook remains positive, and it is likely that the price record will be broken before the end of the year, the strength of the market is balanced by a cautious consumer, strong supply and continued anti-speculation measures.

“We believe competition from launches, prevailing loan curbs and price sensitivity among prospective buyers should continue to keep price increases in check,” Song noted.

In late June, the URA announced plans for tenders of sites potentially yielding 8,040 new residential units. The Confirmed List includes four residential sites and one ‘white’ site (which might be developed for residential depending on the interests of the buyer). Of the properties on the Reserved List, which can be sold if sufficient interest is expressed, seven are residential and five are white.

Since 2009, the Government of Singapore has instituted a wide range of measures to cool the housing market. The measures include additional stamp duties, loan-to-value ratios and total-debt-servicing ratios. As late as 2017, the authorities reiterated their commitment to these anti-speculation policies, though it is unclear whether recent measure are being taken to contain price increases.