2018 has started off well with a 3.9% growth in private home prices, the steepest since Q2 of 2010. The price index had risen by 5.3% then.
Private property growth widens price-gap between public and private sector
This growth has also widened the gap between public and private housing, especially as HDB flat prices have continued to fall by 0.8%. The 3.9% growth in the private sector has gone beyond the projected 3.1% growth, bringing good cheer to the private property sector.
The non-landed home price rose 4.4% last quarter, a significant rise compared to the 0.8% increase in Q4 of last year. The largest leap came from the Outside Central Region (OCR) with a 5.6% growth. Landed property prices also rose 1.9% in Q1 of 2018.
While there have been many land sales and new launches in the past year, the number of completed units have stabilized and may now even be low enough to command higher prices. Some projects have raised their prices in response to the increasing demand. Vacancy rates for completed private homes have also fallen to 7.4%.
Rising land prices nudging both new and resale private property prices upwards
Rising land prices have also prompted both new and resale non-landed developments to raise their selling prices, in particular, those in the vicinity of land plots recently sold. Property analysts are seeing an increase in demand for private properties from buyers seeking replacement homes and foreign buyers.
Bullish land bids and the island-wide en bloc fever have pushed both sale and rental prices up. Residents and tenants who have leasing requirements are now having to look for new homes to rent or buy. The temptation to hold-out for collective sale offers may also stop sellers from putting their homes on the market thus affecting sales in the secondary market.
Some analysts are predicting an 8% to 10% increase in private home prices this year, with new launches having higher price points. Others are even more optimistic, estimating up to a 12% growth.