Private & HDB housing price index 3Q 2020 flash estimate
Private and HDB residential property prices continue to grow
Among the different market segments in 3Q 2020, the landed housing price index grew the fastest at 3.8% qoq. The price index has not expanded at this rate since the property market boom of 2010 to 2011. However, the rate of change in the landed housing price index has been volatile in the past two years.
Meanwhile, the overall non-landed housing price index remained unchanged in 3Q 2020. This was mainly because the increase in non-landed property prices in the Rest of Central Region (RCR) and Outside Central Region (OCR) was cancelled out by the price contraction in the Core Central Region (CCR). The non-landed property price indices in the RCR and OCR grew by 3.3% and 1.7% qoq respectively. On the other hand, prices in the CCR dropped drastically by 4.9% qoq in 3Q 2020, erasing the 2.7% qoq growth from April to June this year.
Based on our research of the reported real estate transactions in the second and third quarter of 2020, in the primary market (real estate sold by developers), the median transacted prices of private non-landed homes in the CCR increased the fastest among the three market segments at 8.0% qoq to $2,535 per square foot (psf) in 3Q 2020. The median transacted prices of non-landed homes in the RCR ad OCR primary markets expanded at a relatively slower rate of 4.3% and 2.6% qoq respectively.
However, it was the decline in the median prices of non-landed CCR homes in the secondary market (resale and sub-sale market) that dragged down the CCR residential property price index. In 3Q 2020, the transacted median prices of private non-landed in the secondary market contracted by a drastic 13.7% qoq in the CCR, while prices in the RCR and OCR increased by 1.1% to 1.2% qoq respectively.
Sustainable Price Increase
The broad-based increase in real estate transactions was an encouraging sign as it indicated that the price growth in the third quarter was driven by an increase in demand and it could be sustained in the coming months.
Although the government has restricted the re-issue of Options to Purchase (OTP) to the same buyer for the same unit, such practice was not common in the secondary market. Hence the strong increase in secondary market transactions in 3Q 2020 was based on real demand from homebuyers.
HDB Resale Prices
The Singapore housing market will face opposing market forces in the coming months. On one hand, the economic effect due to the Covid-19 pandemic is the main factor that could adversely affect housing demand and values. On the other hand, the gradual relaxation of travel restrictions could increase the demand from foreign investors for local real estate. In addition, there are also promising signs in the development of Covid-19 vaccines.
The increase in the private housing price index in the April to September period had cancelled out the 1.0% price contraction in 1Q 2020. Unless the Singapore economy and job market were to take a turn for the worse leading to home prices declining significantly in the fourth quarter, the private residential property price index is projected to increase by 0.5% to 1.5% for the whole of 2020.
The HDB resale price index would likely outperform the private housing price index in 2020. The resale transactions of the newer flats at relatively higher prices and the effects of public housing grants announced by the government last year could push the HDB resale price index to rise by 2% to 3% this year.
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