PRIVATE residential property prices rose 3.4 per cent in the third quarter, largely driven by strong sales at new launches in the suburbs which notched new benchmark prices, though price growth is expected to slow for the rest of the year. For the first nine months of 2022, private residential home prices have increased 7.8 per cent, higher than the 5.3 per cent growth over the corresponding period last year. This follows the full-year increase of 10.6 per cent in 2021.
Private home prices have risen 23 per cent since bottoming in Q1 2020, at the onset of the Covid-19 pandemic. Flash estimates released by the Urban Redevelopment Authority (URA) on Monday (Oct 3) show a broad-based price growth across all segments in Q3, with a sharp jump in the non-landed segment, which went up 4.1 per cent quarter on quarter (qoq), while the landed segment rose 1.2 per cent qoq.
The increase in home prices was led by a 7 per cent qoq surge in non-landed home prices in the outside central region (OCR) – the fastest pace of price growth there since Q3 2009. This subindex had grown 2.1 per cent in the previous quarter.
URA’s flash estimates followed the government’s introduction of new property cooling measures, which took effect on 30th September 2022, to ensure prudent borrowing and moderate demand, especially for public housing resale flats.
Consultants had said the tighter limits on property loans announced was widely expected and anticipated a slowdown in demand for private property, as affordability will be impacted.
As part of the latest cooling measures, private property owners now face a 15-month waiting period before they can purchase non-subsidised HDB resale flats. This is expected to impact mass market projects the most as this segment is most dependent on HDB upgraders who will now find it harder to profit from higher HDB resale prices.
In the HDB resale market, HDB resale prices were up 2.4% in Q3, its 10th consecutive quarter of upward trend. Prices may dip in the coming months in view of the latest cooling measures.
The cooling measures that kicked in on 30th September 2022 come as hot money from private property downgraders flowing into the HDB resale market, coupled with pandemic-related disruptions in the construction sector, helped fuel a 7.8 per cent increase in HDB resale prices in the first nine months of 2022.
As interest rates have risen significantly and are likely to continue rising, the authorities said these new measures will ensure home buyers borrow within their means and moderate demand in the property market.
The number of million-dollar HDB resale flats, which has steadily gained pace since 2021, is expected to ease off in the light of the new measures.
To date, 277 HDB resale flats have changed hands for at least $1 million in the last nine months, compared with 259 for the whole of 2021.
Such deals have also popped up in non-mature estates such as Bukit Batok and Punggol, prompting concerns over home affordability and if public housing prices are running ahead of fundamentals.
Analysts said the upcoming mega BTO launch in November will likely draw some demand away from the resale market, especially among first-time buyers.
In November 2022, HDB will offer about 9,500 BTO flats in towns such as Bukit Batok, Kallang/Whampoa, Queenstown, Tengah and Yishun. Another 2,900 to 3,900 BTO flats in towns such as Kallang/Whampoa, Queenstown and Tengah will be offered in February 2023. In 2023, HDB will launch up to 23,000 new flats and is prepared to launch up to 100,000 flats in total from 2021 to 2025 to meet strong housing demand, if necessary.