Private home prices rise 3.4% in Q3, led by 7% jump for suburban condos: Flash data

Hillock Green Nearby Linear Park

SINGAPORE – Private residential prices climbed further in the third quarter of 2022, with prices outside of the core region rising the most on the support of strong demand for newly launched condominium projects, similar to Hillock Green.

Overall, private residence prices rose 3.4% from the previous quarter, slowed slightly from the 3.5% increase in the earlier quarter, according to flash estimates from the Urban Redevelopment Authority on Monday.

The hike was fuelled predominantly by the non-landed housing segment, where rates were up 4.1% compared with 3.6% in the second quarter, even as mortgage rates rose.

For this sector, prices spiked in the suburbs, going up 7% and outpacing the 2.1% rise in the earlier quarter.

This is the largest quarterly jump in the suburbs since the Q3 of 2009 when prices skyrocketed by 16.1%, noted Miss Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie.

This may have been attributed to a hike in median prices of new non-landed abodes, which balloned by 18% to a record $2,093 per square feet (psf), compared with $1,774 psf in the second quarter.

Non-landed property new sales in the suburbs also climbed from 471 units in the previous quarter to 1,238 units in the third quarter, she commented.

Analysts said new benchmark rates in major new projects in the suburbs drove the steep price growth, with Lentor Modern prices averaging at $2,122 psf and $2,070 psf at Botany At Dairy Farm.

One Global Group senior analyst Mohan Sandrasegeran commented: “Investors and home buyers, aware of the significance of these launches due to the lack of options in the outside of the core region, were drawn by the developments’ advantageous locations, like the Lentor Hills Residences location near Lentor MRT station.”

Rates for non-landed properties in the prime districts climbed 2.3%, faster than the 1.9% in the last quarter. Prices in the city fringe areas slowed down, up by 2.5%, compared with 6.4% in the previous quarter.

Huttons Asia senior director of research, Mr Lee Sze Teck, mentioned that price growth in the city fringe region is catching up to that in the prime central region, directing more people to buy abodes in the prime districts because of the narrowing price difference.

Meanwhile, landed home prices went up by 1.2 % in the third quarter.

Private home prices Q3 2022

Stable property demand, low interest rates and pandemic recovery backed by strong fiscal measures assisted the rise to higher prices in the past year, noted PropNex Realty chief executive Ismail Gafoor.

“With interest rates set to increase further and the prospects of slower economic growth around the corner, we think the recent cooling measures will assist to instil more prudence and caution into the housing market,” he commented.

Analysts said in spite of the latest round of cooling measures that came into effect on September 30th, rates are unlikely to be impacted over the remainder of the year.

For mortgage loans granted by private financial institutions, the medium-term interest rate floor used to calculate the total debt servicing ratio (TDSR) and mortgage servicing ratio was increased by 0.5 percentage point.

This denotes a stricter criteria used to assess borrowers’ ability to qualify for and repay a loan.

Ms Sun said the recent measures are unlikely to significantly affect buyers in the high-end and luxury markets.

“Even with a tighter TDSR, these purchasers may have enough cash or capital to finance their property purchases. Some may redeploy monies from other investments to lower their loans,” she commented.

But Mr Lee said the measures may push developers to delay some private home launches to 2023, and transaction volume may come to a slow down in the next quarter.

Those who are hoping to buy before interest rates hike will likely continue to be visiting launches, said Knight Frank Singapore’s head of research Leonard Tay.

“However, the amalgamation of cooling measures just 9 months from each other, a likely recession in 2023, widespread inflation, and the private home price behaviour over the last 2½ years since the pandemic started, will inevitably begin to take a toll on some home purchasers,” he added.


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