After many consecutive quarters of falling private property prices over the past 4 years, things are finally looking up. Private home prices rose 0.7% in Q3. This rise has ended 15 quarters of price decline.
Private property rise after 4 years
Private home prices rose 0.3% in the first 3 quarters of this year. Although this seems minimal, it is a positive sign considering prices fell 2.6% in the same time period last year. And the price recovery seemed to span all sectors in the real estate market. Both non-landed and landed property prices rose, bolstering sentiments which have been improving steadily.
Despite the Hungry Ghost Festival last quarter, prices rose. While a sharp turnaround is not likely, based on this and recent movements in the property market, analysts expect the price-rise to continue albeit slowly.
9,300 new units expected from collective sales
The Urban Redevelopment Authority (URA) has also released the number of new units which could potentially enter the market from recent collective sales – 9,300.
This would double the number of unsold private homes in the future. 17,178 units have already obtained approval. Though the effect of a large increase in supply is unlikely to hit the market just yet, the situation could be different one or two years down the road.
Developers may watch one another closely to ensure there is no cannibalisation. As such, continued price recovery seems likely but gradual. For investors, timing is crucial as the market situation may change in 2 years’ time as a large wave of new units hit the market.