5 Jul 2018
The flash estimate of the URA PPI indicates a 3.4% increase in prices in Q2 2018.
Private property prices have increased by an estimated 7.4% in H1 2018.
This is the fourth consecutive quarter of increase in the URA PPI since Q3 2017 and following the 3.9% increase in Q1 2018.
Furthermore, all segments of the market experienced positive price changes in Q2 2018:
• Prices of landed properties increased by 3.3%
• Prices of non-landed properties in the CCR increased by 1.4%
• Prices of non-landed properties in the RCR increased by 5.7%
• Prices of non-landed properties in the OCR increased by 2.9%
Market sentiment is still very positive; and this signals that the market is on an upswing trend.
We see increasingly more buyers who are buying now for fear of further price increases going forward. Sellers have also taken the opportunity to revise their asking prices upwards.
Developers have also been pricing their properties higher. For instance, prices at Park Place Residences At PLQ this year have been at an average of $2,022 psf. This is 12% higher than the $1,806 psf during the Phase 1 launch last year.
At Twin VEW, it was launched at $1,399 psf. Compared with Parc Riviera which was launched in 2016 at $1,176 psf, this is a price increase of 19%.
Margaret Ville was also launched at $1,887 psf, 16% higher than the $1,632 psf launch price at Queens Peak in 2016.
These could have contributed to the higher price increases in the RCR and OCR.
The resale market has also been very active, buoyed by enbloc sellers looking for replacement homes and relatively lower prices compared to new launches. From April to 22 June 2018, there have been 3,879 caveats lodged for resale and subsale transactions. This is already higher than the 3,828 resale transactions in Q2 2017.
However, except for the shorter holding period of 3 years for the Seller’s Stamp Duty (SSD); all of the other property cooling measures as well as the strict property financing rules remain unchanged.
The government is committed to maintaining a sustainable housing market. It has shown that it will intervene if necessary to cool the market, and the possibility remains that it may do so in the future; should price increases be excessive and we see the onset of property speculation.
Going forward, the cooling measures will likely stay in place, as it will probably push prices up even more if they are removed.
That said, several risks may slow down the property market recovery:
•Uncertainty in the stock market
•Possibilityof a trade war between major economies such as the US and China
•Rising interest rates
Nonetheless, we are still forecasting an overall 10-12% price increase in 2018, barring any unforeseen circumstances.
Source: ERA's Comments on URA's Flash Estimate of 2Q2018 Private Residential Property Price Index