Ms. Tricia Song, Head of Research for Singapore, Colliers International: 

Price recovery gathered momentum in Q1 2018, rising by 3.1% over Q4 2017 according to flash estimates by the Urban Redevelopment Authority. This marked the third straight quarter of price growth since the index bottomed in Q2 2017.  It is also the strongest quarterly increase since the 5.2% QOQ rise in Q2 2010. With this, the index is up 4.6% YOY. 

As at the end of Q1 2018, private residential prices were down by 7.5% since a peak in Q3 2013.

Core Central Region
The sharper-than-expected price rise in Q1 was driven by broad-based recovery in home values across all segments – with the Core Central Region (CCR) leading the charge. Prices in CCR rose by 5.0% in Q1, boosted by the new launches over the past year: Gramercy Park and Martin Modern. Gramercy Park transacted at a median price of SGD3,177 psf in Q1 2018, up 9.5% compared to the median price of SGD2,902 psf in Q4 2017. Martin Modern also saw its prices crept up steadily since its launch in Q3 2017 – median price hit SGD2,703 psf in Q1 2018, up 14.8% compared to the median price of SGD2,354 psf in Q4 2017.  

We also note resale prices in some districts have risen due to the high land rates implied from the recent collective sales, such as Bukit Timah, River Valley, Holland Road.   

We think the high-end homes segment has turned a corner - following a price slump since June 2013 – and estimate that prices could rise by 10% in CCR for the whole of 2018.

Outside Central Region
Prices of mass market homes in Outside Central Region (OCR) climbed by 3.8% in Q1 as developers raised prices amid the property market recovery, pent-up demand for homes and depleting inventory of unsold homes. Projects that saw noticeable price rise included: Kingsford Waterbay in Hougang; Grandeur Park Residences near Tanah Merah MRT and The Clement Canopy near the West Coast as developers felt confident to raise prices significantly as inventory runs low.

With a slew of new projects – from public land tenders and collective sales – due to be launched later this year, we can expect bullish land rates paid by developers to put an upward pressure on prices of mass market homes. 

Rest of Central Region
Meanwhile, home prices in the city fringe or Rest of Central Region (RCR) inched up by 1.1%. The slower pace of price growth could be due to the lack of unsold inventory in RCR during Q1 2018.  More launches are expected from April onwards such as Amber 45, The Verandah Residences and phase two of Park Place Residences which could bolster the price rise in Q2. 

Landed Homes
The flash estimates showed the price index for the landed segment rose 1.8% QOQ, relatively lower than the 3.4% increase for the non-landed segment. The slower increase could be due to the lack of new landed launches as a benchmark. Nonetheless, we note the upturn in the non-landed housing market have spilled into the landed market. 

According to Colliers International’s research, based on caveats lodged in Realis as of 26 March 2018, total landed transactions rose 71% YOY to 2,394 units in 2017, with 529 units transacted in the first two months of 2018. Median prices for landed homes islandwide have increased 3% to SGD1,147 psf in 2018 YTD from SGD1,111 psf in 2017, while median price quantum has remained relatively stable at SGD2.9 million per landed home.  

Due to relative scarcity, but constrained by the larger price quantum and limitations on foreign ownership on landed homes, we expect average prices in the landed home segment to grow by 5% in 2018. Selected rare assets or locations could see prices grow at a quicker pace due to limited supply, such as Good Class Bungalows (GCBs).   

Outlook
With the stronger-than-expected price growth in Q1 2018, in particular for non-landed homes, we now project average private home prices to rise by 8% (from 5% forecast earlier) for the full year 2018, implying a rise of another 5% for the rest of the year. We think the rise is front-loaded due to the pent-up demand and buyers’ fear of missing out on good value buys as prices trend up.

Average prices could rise by a more gradual pace over the rest of 2018, given an expected gush of new launches in the next few quarters, an expected rise in mortgage rates, and heightened volatility in the world economy. We remain positive on the fundamentals of the Singapore economy and are hopeful of a sustainable gradual property price growth in tandem with the GDP growth.    

Developers will also be mindful that the softer HDB resale prices may affect the ability of upgraders to purchase more expensive private homes.