Every quarter, The Urban Redevelopment Authority (URA) releases a comprehensive database of price indices and sales volume for the various segments of private housing such as resale and new home sales. Ohmyhome analyses this huge chunk of data and picks out the most relevant points and trends for readers.
Myriad of factors boosts new home sales
On a whole, the total number of new home sales in 2021 rose to 13,027 units – a 30.5% (y-o-y) surge compared to the 9,982 units sold in 2020. This is the highest number of new home transactions since the previous high in 2013, when 14,948 units were transacted.
Despite the ongoing restrictions, the new private home sales segment exceeded expectations as compared to 2020. A combination of factors contributed to a well performing market, including pent-up demand, a recovering economy, a low interest rate environment and vaccine optimism which propelled demand and prices in 2021.
Normanton Park the best-selling new launch in 2021
For the entirety of 2021, Normanton Park topped as the best-selling new launch project (excluding ECs). The project was launched in January 2021 and was consistently part of the top 10 best-sellers in each month of 2021.
The development amassed a total of $2.1 billion worth of transactions in 2021. To put this in perspective, it was about $1.1 billion higher value of transactions as compared to the top-seller Treasure at Tampines in 2020, which had about $959.9 million worth of transactions.
The consistent sales in Normanton Park are also due to the appealing nature of the development to families of all sizes. Over 80% of the units were transacted in 2021, with 1,492 units sold out of the 1,862 in the development.
Parc Central Residences was the best performing EC in 2021
The number of launched executive condominium (EC) units have gradually increased in the past few years, due to projects from past land tenders coming on the market.
A total of 1,609 EC units were launched in 2021. This was from the 3 new EC launches in 2021, which were Parc Greenwich, Parc Central Residences and Provence Residence.
A total of 2,119 EC units were transacted in 2021, an incredible 121.2% increase as compared to 2020.
The 3 new EC launches in 2021 offered buyers more options in terms of location as they were at different parts of the Outside Central Region (OCR). But among the EC launches, Parc Central Residences achieved the highest take-up rate, with a total of 696 units sold.
Parc Central Residences has notably garnered a great deal of interest as the project is nearing a sold-out status.
This is primarily due to more buyers choosing to transition from an HDB flat to an EC, as over 57% of the buyers of Parc Central Residences had an HDB address.
With the first EC launch, North Gaia in the upcoming pipeline, we can expect demand to be fueled by a similar group of buyers as well.
More buyers transitioning from HDB flats boost private resale transactions in 2021
Overall private resale volume saw a significant upswing in the number of buyers last year. The number of resale units transacted in 2021 rose to 19,962 units, outpacing the 10,729 resale transactions in 2020 by 86.1%.
This has been the highest number of transactions since 2010, when it recorded a total of 19,169 resale transactions.
In addition, the sub-sale segment exponentially increased from 198 units sold in 2020 to 568 units sold in 2021. This has been the highest since 2013, when there were a total of 1,100 sub-sale transactions.
The motivation behind the increase in private resale transactions can be attributed to two groups of demand drivers.
Firstly, we have buyers who turn to purchasing units from completed resale developments as a result of the uncertainties in the construction market.
Secondly, we have buyers who choose to transition from HDB flats to private resale properties.
According to the data retrieved from URA Realis, there has been a growing interest from buyers with an HDB address acquiring private resale properties since 2019. As the number of units purchased by this group of buyers rose from 2,772 units in 2019 to 6,572 units in 2021.
Private property prices in RCR reach new high since 2010
The overall property price index saw an exponential 10.6% growth in prices in 2021, as compared to the 2.2% price change in 2020. A confluence of factors such as vigorous demand, rise in collective sales and higher number of transactions above the $3 million mark propelled the overall price increase.
Landed prices recorded an unprecedented 13.3% price growth in 2021. A spike in resale transactions, aspiring buyers looking for bigger space and higher value transactions as a result of en bloc activities accelerated the price growth for landed properties.
Among the varying market segments, the Rest of Central Region (RCR) had the highest price change of 16.3%. This was the biggest price change since 2010, when it recorded a 17.6% change.
There was substantial increment in the overall private property transaction volume and value in the RCR segment, which elevated prices to new heights.
To put in perspective, there was a total of $22.9 billion worth of non-landed transaction value in 2021. With about $9.6 billion (41.7%) of the transaction value accounted for the RCR segment.
The consistent sales of mega development Normanton Park, the lure of the luxurious integrated development CanningHill Piers and interest in waterfront living at The Reef At King’s Dock contributed to the upsurge in volume and value.
More high net worth foreigners foray into the private property market
Based on the data retrieved from URA Realis, the number of overall private properties including new sale, resale and sub-sale units purchased by foreigners increased from 755 transactions in 2020 to 1,137 units sold in 2021 – a 50.6% (y-o-y) increase.
This comes as no surprise, with Singapore introducing the idea of the Vaccinated Travel Lane (VTL) scheme in 2021 as more foreign property buyers and investors cherished the opportunity to purchase properties.
Noticeably, there were more high net worth foreigners entering Singapore’s property market in 2021. There were more purchases made above the $10 million mark; the number of transactions grew from 25 units (3.3%) sold in 2020 to 76 units (6.7%) sold in 2021.
As Singapore starts to reopen its border, it will restore confidence to property buyers and investors as well.
The factors in play for the private property market in 2022
Although the recent new launch, Belgravia Ace, had a praiseworthy performance amid the backdrop of the property cooling measures, typically, newly launched landed homes are in limited quantities. Hence, demand for these properties was robust.
1. Cautious Developers
The number of uncompleted unsold units reduced from 21,602 units in 1Q 2021 to 14,154 units in 4Q 2021. Out of the 14,154 uncompleted unsold units, there are about 4,599 units not launched yet. This is 46.6% lower than the first quarter of 2021.
The depleting number of unsold units, coupled with the property cooling measures, will likely tamper demand in the first half of 2022. Although there has been a ramp up in supply, If the recent Government Land Sales (GLS) results were any indication, developers will probably exercise more caution in expanding their land bank.
Developers of previously launched projects might also readjust their pricing and dangle discounts to stimulate demand, while developers of yet-to-be-launched projects will likely release their units intermittently to captivate interest and, in a way, “test the waters” before going all in.
2. Conservative buyers & sellers
Potential buyers and investors might be on the sidelines monitoring the market and trying to comprehend the impact of the property cooling measures in the coming months. Although these groups of people may not form the larger proportion of the property market, they might play a waiting game and lie low.
3. Owner-occupiers fuelling immediate demand
The demand in the property market will presumably be nudged by home buyers who are primarily purchasing for their own occupation. These owner-occupiers are undeterred by the cooling measures as they are purchasing homes to fulfill their immediate housing aspirations.
4. Transient buyers
Although we can expect the momentum to dampen for people who are transitioning from an HDB flat to a private property, we can still anticipate a reasonable amount of interest from these groups of buyers to remain.
As sellers of HDB flats in prime locations who are able to accumulate a higher profit margin will still be the “needle movers”.
5. The probable lacklustre foreign demand
With a 10% increase in ABSD rates, foreign buyers and investors will take a cautious approach and might rethink their position before venturing into Singapore’s property market.
Although demand can be expected to be subdued in the coming months and it may take time for international visitor arrivals to return to pre-pandemic levels, Singapore has been addressing the pandemic in a swift manner. And with the gradual easing of Covid-19 measures and extension of VTLs, the country will remain a safe haven for property purchases and investment by foreign investors.
It is unlikely that high net worth foreigners with ample liquidity and wealth will be heavily deterred by the higher ABSD rates.
Outlook in the first half of 2022
With the aforementioned determinants in play, we are expecting a subdued short-term market reaction: Overall new home sales could be in the range of 4,000 to 5,000 units in the first half of the year. This is about 30% lower compared to the 6,459 units sold in the first half of 2021.
An expected 11,049 private residential units will be completed in 2022. We are expecting the resale demand to be spurred by buyers who are in need of immediate housing and profit gainers from HDB flats looking for a private property. Hence, we are projecting about 6,500 to 7,500 units to be sold in the first half of the year — a 28% drop as compared to the 9,852 units sold in the first half of 2021.
We can expect the overall private property price growth to slow down, with the price index likely hovering around 1% to 2% in the first half of 2022.
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