Huttons’ comments on URA and HDB 3Q 2021’s flash estimates

The URA private residential index increased by 0.9% compared to 0.8% in 2Q 2021. Private home prices have increased 5.1% in 2021, 8.1% since the circuit breaker in 2Q 2020 and 20.8% since the bottom in 2Q 2017.

In 3Q 2021, the luxury segment continued the hot streak from 2Q 2021, notching several notable deals. A 6,049 sq ft unit at Les Maison Nassim went for $35 million or $5,786 psf in Aug 2021, taking the crown for largest quantum and highest psf in the quarter. 15 Holland Hill moved nine units above $5 million in July and Aug 2021. In 2Q 2021, 8% of the purchases in CCR were by foreigners. This doubled to 16% in July and Aug 2021. Foreigners are finding value in Singapore’s luxury market which may be seen as a steal compared to other international financial centres.

In the GCB market, another 14 GCBs were sold in July and August, taking the year-to-date tally to 66. The tech CEOs are making a statement in the GCB market, with TikTok and Razer’s CEO scooping up a Queen Astrid GCB for $86 million and a Third Avenue GCB for $52.8 million, respectively.

We expect private property prices to increase between 6% and 6.5% in 2021. The luxury market may get a boost when more Vaccinated Travel Lanes are set-up and foreigners are able to travel to Singapore. Strong global economic recovery, opening up of borders, high vaccination rate and stable political environment in Singapore are supportive of a growth environment.

Flash estimates from HDB indicate that prices in the HDB resale market went up by 2.7% which is lower than 2Q 2021’s 3%. HDB resale prices have exceeded the previous peak in 2Q 2013 by 0.7%. HDB resale prices have increased by 8.9% in 2021, 14% since the circuit breaker in 2Q 2020 and 15% since the bottom in 2Q 2019.

In 3Q 2021, only 17 out of 26 HDB towns saw price increases compared to price increases in 22 HDB towns in 2Q 2021. The biggest price increase was in Bukit Timah at 12.4% while the biggest fall was in Marine Parade at 9.1%. While volume in 3Q 2021 is estimated to be 19.8% higher quarter-on-quarter, the slower price increase indicates price resistance has set in.

HDB resale prices in Toa Payoh fell for the second quarter running. In 3Q 2021, the proportion of flats sold in Toa Payoh town which are aged 30 and above was at 71.8%. The average prices for these older flats are also lower in 3Q 2021. Marine Parade, another HDB town with ageing flats too saw prices declining in 3Q 2021. Lease decay may be one possible reason behind the decline in prices.

67 HDB flats were sold for $1 million and above, 14 more than 2Q 2021. The most expensive flat sold in 3Q 2021 was a 10-year old 5-room flat at Bishan St 24. This brings the number of $1 million flats sold to 173 in 2021 and possibly between 210 and 230 for the whole of 2021.

Transaction volume for the whole of 2021 is estimated to be between 28,000 and 29,000 flats. Prices may increase by another 2% to 2.5% in 4Q 2021, bringing the price gains for the whole year to more than 11%, the largest gains since 2010.