Singapore’s Private Property Index (PPI) has scaled to new heights rising 0.4 per cent to reach 206.9 points in the second quarter of this year, according to figures by the Urban Redevelopment Authority (URA).
This is a record so far for the private property market.
Analysts from CBRE and PropNex cite low mortgage rates, rising affluence and the increased supply of mass market condominiums and Executive Condominiums (ECs) as reasons why the property market has defied expectations.
“Since 2010, strong supply, high liquidity and low interest rates have been driving the residential market,” said Li Hiaw Ho, Executive director, CBRE Research.
iLi added that affordably-priced shoe-box units has helped to boost sales.
“These units comprise 1,038 units (19.2 per cent) and 2,766 units (42.4 per cent) of the sales volume in the second and first quarters respectively,” said Li.
PropNex, on the other hand said, the property market has defied expectation.
“It appears that the strength of property demand has outweighed concern over the slowing economy, the worrying global economic situation especially with the troubles in Europe and weak growth in the US, and the dampening effect of multiple rounds of government measures,” said Mohamed Ismail, CEO of PropNex Realty.
Strong demand in Q2
Indeed, according to CBRE, demand for new homes seems to be outpacing demand for the whole of last year.
Sales for the first half of 2012 alone shifted 11,928 units.
In the second quarter, 5,402 units were sold – some 17.2 per cent lower than the 6,526 units sold in the first quarter.
“This is three quarters of the sales volume that was recorded for the whole of last year, and the highest half year sales volume ever recorded,” said Li.
Mass market homes dominated sales in the quarter with 3,737 units or 69.2 per cent of new home sales recorded in the Outside Central Region (OCR).
The top selling mass-market projects were Ripple Bay, Flo Residence and Palm Isles shifting 568, 324 and 306 units respectively.
Explaining the resilience of the mass market segment, Ismail said the implementation of the Additional Buyer’s Stamp Duties (ABSD) in December 2011 had caused foreigners to stay away from prime areas.
“Since its implementation, a sharp reduction in foreign demand for private residential properties was observed, particularly that for private homes in the CCR and to a lesser extent the RCR. This in turn, made properties in the suburban mass market segment more appealing to HDB upgraders who buy with a longer term perspective,” he said.
Moving forward CBRE expects to see more units sold this year with a possibility of slowing momentum.
“We will see record volume of 20,000 new homes or higher in 2012 in a stable residential market, amidst uncertainties globally. For the rest of 2012, we expect the residential sales momentum to slow down,” said Li.
Meanwhile, PropNex expects prices to grow at a slower pace of between 1 to 2 per cent due to record supply in the suburbs.
“The record supply in the pipeline could further help to alleviate any pent-up demand in the Outside Central Region, thereby preventing spikes in property prices. In the mid to long term, strengthening global economies would also boost investor sentiment, leading to a gradual recovery of Core Central Region and Rest of Central Region prices,” said Ismail.