Singapore Home Prices Poised To Grow 5% in 2018, Extending Rebound

Singapore’s housing market continues to gain momentum after a nearly four-year slump, with residential prices rising by 0.7 percent last quarter – bringing full-year growth to one percent in 2017 – and further growth of up to five percent expected for 2018.

The boost in private residential prices in the last three months of 2017 marked the second straight quarter of growth, according to a new flash estimate from the Urban Redevelopment Authority (URA). Prices also increased by 0.7 percent in the third quarter, the data from the county’s land use planning and conservation department showed.

The fourth-quarter bump helped Singapore achieve its first annual increase in residential prices in 2017, following a three-year decline that started in 2014 — including a 3.1 percent drop in 2016. Despite the recent gains, home prices are still 10.3 percent below their 2013 peak.

Pent-Up Demand Drove Q4 Price Growth

“The marginal price increase seen in the fourth quarter was largely due to the rising optimism in the housing market which was supported by pent-up demand for homes, diminishing unsold units and better economic outlook,” said Tricia Song, Head of Research for Singapore at brokerage Colliers International, in a comment on the latest figures.

The upswing in the second half ended fifteen consecutive quarters of declining prices, as a combination of government-imposed cooling measures and peak supply of new housing units weighed on private home values. The modest recovery that began in the third quarter was sparked by improved buyer sentiment, as households began to spend excess cash, and tightening housing inventory — a process that began in February with a pick-up in developer sales.

The Core Central Region – made up of districts 9, 10, 11, the downtown core and Sentosa – led the recovery last quarter with a 1.6 percent price gain, primarily due to ongoing launches of condo projects such as Guocoland’s Martin Modern, CDL’s Gramercy Park and Hoi Hup Realty’s Sophia Hills. The area saw a 0.8 percent overall price increase in 2017, according to the URA data.

The Rest of Central Region, which started rebounding earlier than other markets, registered an increase of 0.2 percent in the fourth quarter and 1.6 percent for 2017; while the Outside Central Region saw growth of 0.6 percent quarter-on-quarter and 1.2 percent for the year.

The 0.7 percent quarterly increase in overall residential prices includes a 0.6 percent rise for landed property (houses and bungalows) and a 0.7 uptick for non-landed property (apartments and condos).

Residential Upswing Poised To Continue

Colliers expects overall private home prices to rise by five percent in 2018. “Barring any unforeseen events, we think the private residential market in Singapore has turned a corner with further price upside in the year ahead,” commented Song.

In tandem with the general recovery, collective sales of housing projects also surged last year, totalling S$8.6 billion ($6.4 billion) in 2017 compared to just over S$1 billion ($750 million) in the previous year, according to figures from property agency JLL cited by The Business Times. En-bloc sale activity is believed to be a leading indicator for private home prices, and the collective sale wave that began last May points to developer confidence in an imminent upswing.

In another sign of market optimism, investment sales of properties worth at least S$10 million reached S$35.64 billion ($26.6 billion) last year, jumping 57.3 percent from the 2016 total of S$22.66 billion — the highest level since 2007, according to preliminary figures from brokerage Savills.

Prospects for future price growth, however, are tempered by the fact that the regulatory curbs introduced since 2009 largely remain in place, despite a slight relaxation of the Seller’s Stamp Duty (SSD) and the Total Debt Servicing Ratio (TDSR) last March.