Condo resale prices rebounded stronger-than-expected in 2020

Private home demand will further recover in 2021, analysts advise.

Condo resale prices in Singapore rose for the whole of 2020 albeit at a slower pace than in 2019, rebounding stronger than expected and indicating recovering demand compared to the past two years.

Condo resale prices rose by 1.4% for the whole of 2020, slightly lower than the 1.8% rise in 2019, according to data from the SRX.

By region, condo prices in the Rest of Central Region (RCR) and Outside of Central Region (OCR) jumped by 0.5% YoY and 3% YoY, respectively. In contrast, prices in the Core Central Region (CCR) dropped 1.4% YoY for the whole of 2020.

The rebound in private resale prices and sales volumes were stronger than expected since Q3 2019, notes Christine Sun, head of research and consultancy, OrangeTee&Tie.

In comparison, sales were lacklustre and prices were generally stagnated in 2018 and 2019 after new cooling measures were implemented, she adds.

“Home demand may be returning for the private resale market,” Sun said. “With low mortgage rates, a tight supply of new homes entering the market and a possible economic recovery, the private resale market may continue to improve this year.”

Prices inched up by 0.3% month-on-month (MoM) in December compared to November 2020, marking the fifth consecutive month of increase. Per region, RCR and OCR prices climbed by 0.3% and 0.5% whilst CCR price dipped 0.4% in December 2020.

A total of 10,712 resale transactions are recorded for the whole of 2020, 18.1% higher than 2019. This renewed interest in the resale condo market in the second half of 2020 may have also helped to support the new sale market, as some sellers may have recycled capital into acquiring properties in new launches, says Siew Ying Wong, head of research and content, Propnex Realty.

An estimated 1,236 units were resold during the month, a 5.1% decrease from the 1,302 units resold in November 2020. This is 79.4% higher than volumes in December 2019, and almost double (96.4%) than the 5-year average volumes for the month of December.

This also marks the sixth consecutive month where resale volume crossed the 1,000-unit level, according to Wong.

“The streak of brisk sales will be much welcomed by property owners, given that the resale market has been relatively muted since fresh cooling measures were introduced in July 2018,” he noted.

The highest transacted price for a resale unit in the month is achieved at $12.2m at Skyline @ Orchard Boulevard. In RCR, the highest transacted price is a unit at Pebble Bay resold for $4.3m. Meanwhile, a unit at A Treasure Trove was resold for $3.2m, the most expensive unit resold in OCR.

By region, 60.9% of the volumes sold in December are from OCR, 22.9% from RCR and 16.3% from CCR.

Demand for resale private homes in the OCR is expected to remain healthy in the future, supported by owner-occupiers and HDB upgraders, says Wong.

“Additionally, some buyers who have a tighter budget but are looking for a more spacious home—due to telecommuting—may also opt for more affordable resale properties in the OCR,” he added.

In contrast, Wong notes that the CCR—as a proxy for luxury homes—has faced more pricing pressure relative to the other two segments as travel bans have crimped demand for high-end homes from foreign buyers. Some prospective buyers may also have been more cautious about committing to a big-ticket home purchase amidst the economic downturn, preferring to adopt a wait-and-see approach.

Nevertheless, Wong expects the gradual return of market confidence and the low interest rates are some factors that will support the CCR resale segment.

OrangeTee&Tie’s Sun expects further recovery in 2021. “We anticipate that sales of resale homes may continue to increase moderately this year, and the number of transactions could reach 11,000 units. Resale prices may increase further by 1% to 4% for the whole of 2021,” she concluded.