As prices of newly launched non-landed properties rise, the price gap between them and resale condominiums are pulling further apart. Overall condominium sales have however remained stable as housing prices have become more affordable and median household incomes have risen.
Demand and prices of new private homes growing quickly
New private home sales seemed to have picked up and demand for new units remained resilient despite the somewhat gloomy economic outlook. The resale condominium market, however, seems a little more lacklustre in comparison.
New condominium prices have risen 9.8% in Q3 of this year across all 3 regions (core central region; rest of the central region; and outside the central region). Resale condominium prices, on the other hand, have only climbed 1.6%. Prices of new private non-landed homes were also 28.8% higher than those of resale units in the first 3 quarters of this year.
The widest gap of 41% between the average prices of new and resale homes was in the city fringe or rest of central region (RCR).
The higher prices of new units launched recently have rapidly moved the new private non-landed property sector ahead of the resale segment. New launches may have been priced high due to the high land prices which developers paid in the last few years amidst the collective sales fever. According to analysts, this trend was creeping up on the industry as far back as 2015 but the pace has quickened in the first 3 quarters of 2019.
Prices of freehold homes near MRT stations command a premium
In 2019 alone, there are be 57 new launches in total. The advantage new units have over resale ones are their mere size. In fact, from 2010, the price gap has already begun to widen as unit sizes of new homes were reduced while overall prices remained affordable.
Analysts, however, say that as long as limits are placed on the downsizing of units, the price gap will remain steady. The growing stock of older homes, however, is more worrying as it will only increase in the years ahead.
An increasing number of 99-year leasehold properties will also see their leases diminishing and the capital appreciation of these resale properties may slow down.