SINGAPORE (Jan 26): Prices of private residential property in Singapore is keeping up its recovery even as rental rates continue to decline, according to real estate statistics for 4Q17 released today by the Urban Redevelopment Authority (URA).

Private home prices increased by 0.8% in 4Q17, keeping pace with the 0.7% increase in the previous quarter.

For the full year in 2017, prices of private homes increased by 1.1%, compared to a 3.1% decline a year ago.

“More buyers are returning to the market in the second half of 2017, after accumulating wealth from waiting on the sidelines for the past four years when the market turned sluggish and prices corrected,” says Christine Li, director of research at real estate services firm Cushman & Wakefield.

“The recovery in the residential market is also broad-based with both landed and non-landed segments sustaining their price gains for a second consecutive quarter,” she adds.

However, rentals of private residential properties declined by 0.9% in 4Q17, after holding steady in the previous quarter.

For the whole of 2017, rentals of private residential properties declined by 1.9%, compared with a decline of 4.0% in 2016.

The easing of rental decline comes on the back of a lower vacancy rate, which dipped to 7.8% in 4Q17, from 8.4% in the previous quarter.

“As the Singapore economy picks up pace in 2018, more foreign labour including working professionals will be hired. Coupled with the removal of the older en bloc developments, occupancy rates for private properties could start to improve,” Li says, adding that the rental market could find its footing towards the end of 2018 or early 2019.

Meanwhile, excluding executive condominiums (ECs), developers sold 1,864 private residential units in 4Q17, some 30% lower than the 2,663 units sold in the previous quarter.

For the whole of 2017, developers sold 10,566 units, 33% more than the 7,972 units sold in 2016.

“Demand could continue to outpace supply in the short to medium term, with thousands of en bloc millionaires looking to purchase replacement homes or invest their windfalls,” says Li.

However, according to URA, the redevelopment of private residential developments sold en bloc in the past two years will add a significant number of new housing units to the supply pipeline.

As at end December, there was a total supply of 42,173 units, including ECs, in the pipeline with planning approvals.

Of these, 19,755 units remained unsold as at end December, up from 17,178 units in the previous quarter.

“In addition to the 19,755 unsold units with planning approval, there is a potential supply of 19,900 units (including ECs) from Government Land Sales (GLS) sites and awarded en bloc sale sites that have not been granted planning approvals yet,” URA says.

A large part of this new supply of 19,900 units could be made available for sale later this year or next year, and will be completed from 2021 onwards.