According to the URA private residential index flash estimates, overall prices increased by a slower pace of 0.4% in the first quarter of 2022 as compared to the 5.0% growth in 4Q 2021.
Private property prices across the different segments saw prices decline, except in the Outside Central Region (OCR). It is likely the rapidly depleting number of unsold units and lesser number of units launched in OCR, led to buyers and investors to compete for a limited pool of supply, resulting in a nudge in price growth by 1.9%. While, interest in new landed homes such as Belgravia Ace attributed to prices keeping pace by 4.0%.
A confluence of factors led to the slower growth in the overall private property prices. This includes the cooling measures in place, absence of major new project launches, decreasing unsold units, subdued demand, lower number of high value transactions and global uncertainties from the Russia-Ukraine conflict.
Subdued demand in 1Q2022
Preliminary figures of private home sales reflect a drop in the sales in the first quarter of 2022, on the backdrop of Chinese New Year festivities and lack of major new project launches. As there were only 3 notable project launches: Royal Hallmark, Belgravia Ace and Ikigai.
With ongoing global uncertainties as a result of the Russian-Ukraine dispute and the likelihood of a rise in interest rates, buyers and investors might be exercising caution as well.
Drop in demand from foreigners further contributed to the subdued demand in the first quarter of 2022. It is likely that the higher ABSD (additional buyer’s stamp duty) rates for foreign buyers and investors have led to this decline.
Drop in overall transaction value
Overall private residential transaction value declined in both the primary and secondary residential market. The primary market saw a 43.2%, declining from $6.7 billion in 4Q2021 to $3.8 billion in 1Q2022. While in the secondary market, there was a 51.1% drop. Decreasing from $12.7 billion in 4Q2021 to $6.2 billion in 1Q2022.
Another contributing factor was that there were lesser big-ticket transactions taking place, which were above the $15 million mark as compared to 4Q2021. As the number of transactions reduced from 35 units sold in 4Q2021 to 20 units transacted in 1Q2022.
With new launches coming onstream and the relaxation of safe management measures, we expect market sentiments for private home sales to remain positive in the upcoming months.
Recent tender results for government land sale sites, reflects general optimism among developers. Developers will likely be moving forward with their new project launches. With upcoming projects such as North Gaia (EC), Piccadilly Grand, The Arden and Liv @ MB.
We are anticipating overall private property price growth to increase at a moderate pace, with the price index likely hovering around 1% in the first half of 2022.
The anticipated slower price growth is due to the on-going global uncertainties as a result of the Russia-Ukraine conflict and rising interest rates.
The Urban Redevelopment Authority (URA) will release the updated and full set of statistics on Apr 22 for the first quarter of 2022.
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