2022 is the Time to Buy a New CCR Condominium, But Why?
Consider them the premium product positioned above what is ‘mainstream’: the BMWs to Hyundais, the iPhones to Nokias, or the Chatterbox to the humble $3.50 plate of chicken rice found in almost every Singapore hawker centre.
Traditionally, that’s how private properties in the Core Central Region (CCR) are viewed in comparison to their Rest of Central Region (RCR) and Outside Central Region (OCR) counterparts.
But if you have been keeping a close tab on Singapore’s real estate market, you will know that, despite their premium status, new CCR projects, have not seen the same meteoric growth in launch prices as RCR and OCR private homes.
Medium Price Growth of New Private Homes
Source: URA, ERA Research and Consultancy
Since the start of 2020, the median psf prices for newly-launched private homes in the CCR have dipped by 2.1%. Conversely, the median psf value for their RCR and OCR counterparts went up by 33.9% and 43.7% respectively since January 2020.
In other words, new private launches in the CCR are ripe for the picking at their present entry point – especially for home buyers who are interested in putting their funds toward prestigious properties with room to grow.
Regardless, this is a golden opportunity that will not last forever. But explaining why requires a deeper delve into the factors influencing the current market for new private homes.
How did the shrinking price gap between new CCR and non-CCR properties come to be?
When travel restrictions were tightened due to the COVID-19 pandemic, Singapore saw a slowdown in its construction industry, severely hampering the progress of ongoing housing projects.
This reduction in manpower was also accompanied by material shortages, thus further tightening the chokehold on the supply of private homes (as well as HDB flats).
Supply of Unsold Private Homes in Launched Private Residential Developments
Source: URA, ERA Research and Consultancy
Fast forward to today, these impacts, combined with strong sustained demand for housing, has contributed to rapidly dwindling new private housing numbers in the RCR and OCR – as well as higher new launch prices in both these regions.
In fact, it is said that a new benchmark launch price has already been set for the OCR. Following the recent successful launch of AMO Residence, new OCR projects are expected to have a starting price of $2,100 psf, which further narrows the current price gap between new CCR and non-CCR properties.
What do these phenomena say about the prices of future private launches in the CCR?
In a nutshell, the present highs in RCR and OCR new launch prices point toward a similar shift in the needle possibly happening to CCR projects in the foreseeable future.
Expected Future Price Shifts of New Condominium Developments by Region
Source: URA, ERA Research and Consultancy
To explain this, we shall return to the analogy of upmarket products vs. regular goods:
Just as there is always a price gap between high-quality offerings and their ‘mainstream’ counterparts, a similar difference exists perpetually between CCR and non-CCR properties due to the former’s repute as prime real estate in Singapore.
As a result, it is only a matter of time, as well as changing market conditions before the gap between CCR and non-CCR new launch prices widens once more.
What could cause the price gap between new CCR and non-CCR private properties to widen?
Although the price gap between CCR and non-CCR new launches still appears to be narrowing at the time of writing, there are already signs pointing to a reversal
Number of CCR condominium units purchased by foreigners
Source: URA, ERA Research and Consultancy
There are two indicators that the winds will likely change:
One, the rising number of foreign buyers purchasing CCR properties; and two, the recovering construction industry, which while still struggling with manpower woes, is now seeing foreign worker numbers returning to almost pre-pandemic levels.
The former suggests that there is currently demand for CCR properties among foreign buyers presently – and this is expected to strengthen further when travel restrictions in other countries (e.g. China) are finally relaxed.
In terms of the latter, it can be viewed as a vital first step toward boosting the supply of private housing across Singapore, including the OCR and RCR.
To sum up
Keeping these observations in mind, it is worth noting that there is still a window of opportunity for first-timers and home upgraders interested in entering the CCR – and particularly those who are keen on purchasing a prestigious District 9, 10, or 11 private property with the hopes of future appreciation.
For more options and insights, reach out to us today!
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