JLL's perspective: Flash estimates of 1Q18 Private Residential Property Index
Mr Ong Teck Hui, National Director, Research & Consultancy
SINGAPORE, 2 April 2018 – The Urban Redevelopment Authority's flash estimates for 1Q18 shows the private residential property index rising sharply by 3.1% in the first quarter of the year. Stronger than expected increases were seen in some sub-indices especially those for non-landed homes in Core Central Region (CCR) and Outside Central Region (OCR) which rose 5.0% and 3.8% respectively.
The constriction of supply due to the slowdown in launches in recent quarters and lack of units on the resale market due partly to enbloc optimism, coupled with pent-up demand have contributed to the stronger upside in prices. In 2H17, the volume of launches plunged 55% y-o-y, reducing new sale opportunities significantly while prices were turning around and demand was buoyant. The bullish enbloc market is also a contributing factor as high land prices has led to the perception that unit selling prices will be higher and hastened purchases at more optimistic prices during the quarter.
CCR leads price increases
Demand for CCR homes has picked up, leading to the 5% rise in its index. In the high-end segment in the prime districts, New Futura was launched in 1Q18 and 48 units were reported to have been sold at an average price of above $3,200 psf. The average price of Gramercy Park in 1Q18 was $3,185 psf, 9.1% higher than the average of $2,920 psf in 4Q17. Likewise, the average price of Martin Modern was $2,697 psf in 1Q18, 14.5% higher than its average of $2,356 psf in 4Q17. Other examples of CCR developments recording significant increase in prices in 1Q18 include Reflections at Keppel Bay (+5.7%) and The Interlace (+11.8%).
Singapore's prime residential market has appeared to be more attractive relative to other global cities. It is still in the early stages of recovery while the prime residential markets of Hong Kong, Sydney, Melbourne and Tokyo are nearer the top end of their market cycles or peaking while the prime London market is in decline. Viewed from this perspective, Singapore seems to offer better prospects of an upside in prices.
OCR prices also strengthen considerably
Demand for OCR homes is attributed to their affordability and is supported by the largest pool of buyers. In 1Q18, OCR transactions accounted for about 50% of total transaction volume while CCR and RCR accounted for 18% and 31% respectively, based on caveats downloaded from URA Realis. Examples of developments recording price increases in 1Q18 include Grandeur Park Residences which saw a 7.8% increase in average price from $1,416 psf in 4Q17 to $1,526 psf in 1Q18 and Symphony Suites where average price rose 3.9% from $1,046 psf in 4Q17 to $1,087 psf in 1Q18. Other projects with firm average pricing in OCR in 1Q18 are Kingsford Waterbay ($1,379 psf) and Parc Botannia ($1,283 psf).
The pickup in price momentum in 1Q18 is significant as it could be indicative of a stronger price upside in 2018, with the index possibly rising around 10% if current trends were to continue.