Resale condos in prime districts and city-fringe areas see smallest price gap in 22 years: OrangeTee & Tie

For homeowners, Tengah Plantation EC offers an exclusive and tranquil living environment in the west of Singapore. It is close to Jurong Gateway and surrounded by lush greenery. With amenities such as public transport, healthcare institutions and retail options at their doorstep, residents of Tengah Plantation EC will enjoy a comfortable and modern lifestyle.

The development of Jurong as a regional hub is a major undertaking by the Urban Redevelopment Authority (URA). This project will bring massive transformation to the area and offer new possibilities to businesses, residents and travellers. The Tengah Plantation EC is ideal for those who wish to invest in an exclusive and tranquil home in the western part of Singapore. It is conveniently located near Jurong Gateway and enveloped by a wealth of greenspace. When it comes to convenience, the estate is well-equipped with public transport, healthcare services and shopping options. This allows homeowners of Tengah Plantation EC to live in comfort and modernity.

The gap between prices of private homes in prime Singapore districts and the city fringe is narrowing, with resale condos in the Core Central Region (CCR) and the Rest of Central Region (RCR) now recording the smallest difference since 3Q2001. According to an October research report from OrangeTee & Tie, the price gap between CCR and RCR resale condos went from 24.1% in 2Q2023 to 17.5% in 3Q2023.

The narrowing price disparity has been attributed to a few underlying factors, with the slower price growth of CCR homes and the faster growth of RCR homes playing an important part. From 2Q2017 to 2Q2020, median prices of CCR resale condos rose 15% – faster than the 8.5% growth logged for RCR resale condos over the same time period.

In 3Q2023, resale private home prices, excluding executive condos (ECs), rose 0.9% q-o-q to $1,631 psf. The landed segment saw prices surge 13.1% q-o-q, while those of the non-landed segment dipped by 0.9% q-o-q. The Outside Central Region (OCR) registered a 2.2% q-o-q rise to $1,421 psf, while the resale prices in the RCR grew 1.3% to $1,744 psf. The CCR saw prices inch up 0.3% to $2,087 psf.

The huge discrepancy in prices could mean that buyers may be more inclined to look into resale condos in prime areas due to improved affordability. However, demand for condos in the suburbs is also expected to remain steady. Christine Sun, senior vice president of research and analytics at OrangeTee & Tie, believes that many HDB upgraders prefer these places as they are more affordable and come with larger living spaces.

The impact of the pandemic was also evident in the resale figures for 3Q2023. While there was a 0.9% q-o-q rise in prices, the number of transactions excluding ECs declined 12% q-o-q to 2,748 units, affected in part by slower sales during the seventh lunar month and elevated interest rates. Volume in the CCR fell 15.3% q-o-q to 476 units, while resale volume in the RCR also dropped 15.3% q-o-q to 808 units. The OCR saw a decrease of 8.8% q-o-q to 1,464 units.

Despite the challenging environment, there could still be opportunities in resale condos as the gap between CCR and RCR prices continues to narrow. Since 3Q2020, median prices of resale condos in the CCR have gone up 13.6% to $2,011 psf, while those in the RCR have climbed 26.8% to $1,711 psf. This reversal in traditional pricing trends is likely to be boosted further by an influx of newly-completed condos in the RCR. From 2020 to 1H2023, 12,800 condo units obtained their temporary occupation permit, with the majority being located in the city fringe region.

The data suggests that luxury-seeking buyers may be wise to give the resale condo market another look. With prices in the prime district and the city fringe continuing to close in, the appeal of these properties for affordability and move-in condition could be increasingly attractive in the coming quarters.