Huttons’ comments on URA and HDB 1Q 2021 flash estimates
The URA private residential price index rose at a faster pace in 1Q 2021 compared to 4Q 2020.
This is probably due to ample liquidity chasing after limited supply in the market. For example in the new sale market, two new to market launches, Normanton Park and The Reef at King’s Docks saw superb sale results on the first day of launch. Transactions in the resale market also rose in the first two months of 2021 according to a real estate portal.
The final tally for the private residential market could possibly see a higher price increase when figures for March are in. Midtown Modern, one of the new launches in March had an excellent first day, clocking in sales of more than 60% of the available units. Eden was sold to a group of buyers at an average price of $4,827 psf while in the Good Class Bungalow market, a record sale in the Nassim area was done at $4,005 psf just days ago.
Chances of cooling measures have been raised by a notch as the Government looks to keep prices in check. First time home buyers are likely to be unaffected as past measures have targeted investors and foreign buyers. Wealth taxes in the form of ABSD may take centre stage and Singapore will be one of the first few countries in the region to tax the rich. Another possible measure is the tightening of TDSR for investors and foreign buyers while keeping it unchanged for first time home buyers.
Resale HDB prices increased 2.8% in 1Q 2021, slightly slower than the 3.1% seen in 4Q 2020. Resale volume in the HDB market has slowed in the first two months of 2021 because there is increased resistance amongst buyers to pay higher prices and more cash downpayment. Price growth may slow in the coming quarters.