_Singapore: Recovery gathering pace in private residential market

Total New sale, Sub-sale and Resale residential transaction volume hit above 6,500 for the second consecutive quarter in Q3 2017, against a backdrop of stronger economic growth, returning homebuyer interest and the hype in land sales. Residential prices appeared to show first signs of recovery in Q3 2017, with the All Private Residential Property Price Index (including ECs) reporting an overall price increase of 0.7% q-o-q.

Exhibit 1: Island-wide transaction volume

Source: URA, Knight Frank Research Note: Data is obtained from the URA Quarterly Statistics Q3 2017. 

Over at the leasing market, overall activities maintained momentum in Q3 2017 albeit seeing a lower value in transactions. Rental yields fell across all market segments, with influx of new completed supply of private homes, curbs in foreign workforce growth and a persistent tenants’ market situation. 

Exhibit 2: Leasing Transaction Volume and Value, Island-wide

Source: REALIS, Knight Frank Research

Looking ahead into the last quarter of the year and 2018, new residential developments are likely to see sustained interest from prospective buyers, particularly in projects near future growth precincts like Paya Lebar regional centre and Jurong Lake District. 

Total new sale transaction volume for 2017 would expect to be between 11,000 to 13,000 units, buoyed by returning interest from locals and foreigners and the outstanding quality of new project launches that has brought significant interest into the market. Knight Frank projects that island-wide private home prices to continue its recovery in Q4 2017 and over the next two quarters, with landed home prices likely to lead the increase.

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by Tan Tee Khoon & Tay Kah Poh