Private home prices rose the highest in almost eight years for the first quarter, to the surprise of analysts who were predicting a moderate price increase.
This prompted some of them to revise their market forecast for non-landed private home prices to rise by up to 10 per cent this year — likely to be boosted by the growing momentum of transactions and by displaced homeowners from en-bloc sales who are looking for newer homes.
On the back of positive economic growth numbers — barring no changes to the existing cooling measures put in place by the authorities — another factor for the projected increase are higher prices for new launches due to higher land costs.
Eugene Lim, key executive officer of real estate agency ERA Realty, said: “The market was expecting a moderate price increase; this jump came quite as a surprise. With almost all the cooling measures still in place, this indicates a very positive market sentiment; and the market is on an uptrend.
“We had projected a 3-5 per cent price increase for 2018 earlier this year and have now revised it to 8-10 per cent.”
The private residential property price index gained 3.1 per cent quarter-on-quarter in the January-to-March period, estimates from the Urban Redevelopment Authority (URA) showed yesterday. This is up from the 0.8 per cent increase registered in the previous quarter.
Besides being the third consecutive quarterly expansion, it is also the largest quarterly price increase since the second quarter of 2010, when prices rose by about 5.3 per cent then.
Tricia Song, head of research for Singapore at Colliers International, agreed that there is “pent-up demand and buyers’ fear of missing out on good value buys as prices trend up”.
“We now project average private home prices to rise by 8 per cent (from the 5 per cent forecast earlier) for the full year 2018, implying a rise of another 5 per cent for 2018,” she added.