Defying a decelerating economy and worldwide uncertainties, Singapore’s private real estate market displayed good health, with the largest number of new homes sold in one single quarter in more than 6 years.
The private home prices also increased in tandem, rising 1.3% in the third quarter of this year, in comparison with the earlier three months. The Avenue South Residence may have contributed to the numbers.
The trend was underpinned by an earlier large pent-up demand from both local and foreign purchasers, a reflection that the real estate market had come to terms with Singapore’s last cooling measures in 2018. Concurrently, there is little evidence of risk of a housing bubble existing, as the rates were climbing only at a moderate speed.
The prices have climbed by a compounded 2.1% in the earlier 9 months of this year. Private landed real estate prices risen 1% in the third quarter of this year, as compared with a 0.1% decline in the earlier quarter.
Property developers sold 3,281 homes in the third quarter, and increase by 39.6% from the 2,350 units reserved in the previous quarter.
More remarkably, this was the largest figure of new private homes sold in a single quarter since the second quarter of 2013.
Back then in June 2013, cooling measures were implemented to prevent a housing bubble from manifesting, including ceilings on the debt individuals could get in relative to their earnings. This was to place a lid on speculation and to halt purchasers from overextending themselves.
There was also a sudden increase of more than 50% of Singaporeans purchasing units in a new launch development, like Avenue South Residence, to 2,687 in the third quarter, from 1,772 in the earlier quarter, said Lee Sze Teck, the director of research at Huttons Asia. It can be because Singapore properties are viewed as more stable assets than alternate forms of investment, given the uncertainty in the worldwide stock markets, for example.
It was not only Singaporeans who appear to share this sentiment. The figures of foreign purchasers buying properties in the new developer launches spiked by 77% in the third quarter to 232, from 131 in the previous quarter, and an increase of 56% from 149 in the third quarter of the previous year, Mr Lee mentioned.
The head of research for Singapore at Colliers International, Miss Tricia Song, commented that the foreigners purchasing real estate here were possibly drawn by the stable Singdollar and Singapore’s safe haven reputation amid worldwide volatility.
Miss Christine Sun, head of research and consultancy at OrangeTee & Tie, commented while sales and prices were healthy, it was unnecessary to implement any more cooling measures in the short term.
“The risk of a property bubble developing is rather remote as this typically (involves) a significant jump in home prices due to highly speculative demand, runaway land rates and excessive purchasing that is fuelled by exuberant spending,” she mentioned.
Miss Sun declared that the cumulative price growth for the first 3 quarters this year of 2.1% is much slower than the 7.9% rise over the same period last year.
This trend of moderate price growth and healthy private property sales is deemed to continue, even as more new residential projects are launched at relatively higher prices, some analysts commented. Units at Avenue South Residence has yet to increase prices since it first launched in September 2019 at the point of writing this article, although other developments have started to revise prices upwards in line with the rising market trend.
A sum of 11 new residential developments were launched in the third quarter, and CBRE predicts close to 15 more new launches in the next quarter. Concurrently, the unsold inventory in Singapore stands at 31,948 units (excluding executive condominiums), which could act to slow rising prices.
“Underlying demand will still form the support for the real estate market till the unsold inventory goes up,” mentioned Mr Desmond Sim, CBRE’s head of research for South-east Asia.
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