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Comments on Q3 2021 URA Private Residential Property Price Index Flash Estimate

Xian Yang Wong

According to the URA flash estimate, private home prices in Singapore rose for the sixth straight quarter at a slightly faster pace compared to the price growth in the previous quarter. 

The price increase in Q3 2021 was observed in both the landed and non-landed segments which saw their indices climb by 2.5% and 0.5% qoq respectively. YTD, overall private residential prices are up by 5.1% and continue to break historical highs. With a reading of 165.0 points, the property price index has reached a new peak in Q3 2021 based on the flash estimate.

Within the non-landed segment, the Rest of Central Region (RCR) was the best performer among the three non-landed submarkets, growing 2.2% qoq in Q3 2021, whereas prices for non-landed homes in the Core Central Region (CCR) and Outside Central Region (OCR) 
dipped slightly by 0.6% and 0.2% qoq, respectively. 

It seems that the price performance across segments in Q3 2021 was characterised by price reversion effects, where segments which outperformed in Q2, saw a slight retreat in Q3. CCR and OCR prices grew by 1.1% and 1.9% qoq in Q2 2021 respectively while RCR grew only 
0.1% qoq in that quarter. In short, we believe the Q3 price movements were driven by short-term volatility rather than reflect a change in trends.

As such, barring cooling measures, we still see further price growth for the private residential market, which is supported by multiple tailwinds including, strong GDP growth (6-7% growth for 2021), recovering labour market (unemployment down to 2.8% in July), robust HDB upgrader demand amidst rising HDB resale prices (YTD2021 % price change: 8.9% increase) and relatively low interest rates.

The confluence of low interest rates and healthy economic growth creates ideal conditions for further property price growth. As such, domestic demand for property, which is the main driver for the Singapore private residential market, is expected to remain robust.

Foreign demand will be another pillar of support for the private residential market, amidst strong wealth inflows into Singapore given her position as one of the leading wealth management hubs globally. This would be beneficial for the CCR market which caters to high
net worth individuals.

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