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


“Private home prices continued their steady ascent in Q2 2018, rising by 3.4% after climbing 3.9% in Q1, according to flash estimates from the Urban Redevelopment Authority. This marked four straight quarters of rising streak, reflecting a sustained trend of price growth that is supported by the rosier economic outlook, relatively healthy housing demand, and rising market confidence. 

With this increase, private residential prices were up by a cumulative 7.4% in the first six months of 2018. Home values are now 3.6% down from a peak in Q3 2013. In fact, non-landed private residential prices are just 1.7% below a Q3 2013 peak. Landed home prices are still 9.6% below Q3 2013 peak. 

Generally, home values gained firmer footing in Q2 due to several new condo projects being launched at 13-25% higher prices, and possibly helped by en bloc sale beneficiaries dipping into the resale market for replacement homes. 

Rest of Central Region (RCR)
The uptick in prices in Q2 was broad-based, with the RCR – where prices climbed 5.7% - leading the increase. The sharper price growth in the last quarter was mainly due to the higher prices transacted at bumper launches during the quarter. In particular, Amber 45 sold 86 units at a median price of SGD2,378psf in May, Park Place Residences at PLQ sold 187 units at a median price of SGD2,045psf and Margaret Ville sold 114 units at a median price of SGD1,871psf. These psf prices are estimated to be 13-25% above comparables, but buyers are still attracted due to either limited supply in the locality and/or attractive project attributes such as unblocked view and an efficient layout.  

We anticipate more launches in RCR which are near MRT stations or in locations with demand catchment which could drive further price growth. Park Colonial, Woodleigh Residences, Tre Ver and Stirling Residences are some of the major launches in the RCR which could drive demand. However, we expect price growth to slow down from Q2 2018, on a higher base. The deluge of supply in these locations may also prompt developers to price their projects or pace their launches prudently. 

Outside Central Region (OCR) 
OCR home prices rose at a slower pace in Q2 - at 2.9% - compared with the 5.6% growth posted in Q1. The growth slowed down sequentially as The Tapestry launch in Tampines set benchmark prices in Q1. In Q2, several project launches could have contributed to the price increase, including Twin Vew which sold 446 units at a median price of SGD1,383psf, Affinity at Serangoon which sold 104 units at SGD1,586psf and The Garden Residences which sold 66 units at SGD1,662psf. 

Riverfront Residences was launched over the weekend at indicative prices of around SGD1,200psf. The Jovell at Flora Drive is also scheduled to preview during the 14 July weekend. We expect prices at OCR to grow at a measured pace as the market digest the supply. 

Core Central Region (CCR)
Similarly, prices rose at a slower clip in the CCR, inching up by 1.4% in Q2, compared to a 5.5% increase in Q1. This came off a higher base set by New Futura and Wallich Residence in Q1. In Q2, the only new launch in CCR was Grange 120 which sold 41 units at SGD3,165psf. Nonetheless, momentum appears to be positive, with continued sales in New Futura, Gramercy Park and Marina One Residences. 

Looking ahead, we think there are potentially more upside for CCR prices in view of the pipeline of new residential developments – from public land tenders and collective sale market - that could be launched in the coming quarters. These may include: 3 Orchard By-The-Park (next to Park House and Cuscaden land site which fetched benchmark land rates over the past quarter), South Beach Residences, 8 St Thomas, One Draycott etc.  

Outlook
With the two strong quarters of price increase, we are now raising our private home price forecast for the full 2018 to 12% from 8%. This means H2 2018 could see a further 4-5% rise from here. As indicated in our previous commentary, we expect the price growth to be front-loaded, with a more gradual increase towards the second half of the year on a higher base and as more new supply hit the market. We believe competition from launches, prevailing loan curbs and price sensitivity among prospective buyers should continue to keep price increases in check.  

Slower takeup at aggressively-priced projects as well as slower price growth should encourage developers to be more measured in launches and pricing.”