Private home prices down 0.6% in Q1: URA flash data

Fall steeper than that in previous quarter as July 6 cooling measures, macro-economic uncertainty hit sentiment

Private home prices eased at a faster clip for a second straight quarter, falling 0.6 % in the first quarter of this year from the previous three-month period, according to the Urban Redevelopment Authority's (URA) flash estimate released yesterday.

The 0.6 % price drop is slightly steeper than the 0.1 % dip in the fourth quarter of last year, as the July 6 cooling measures and macro-economic uncertainty took their toll on buying sentiment.

Ms. Christine Li, senior director and head of research Singapore at Cushman & Wakefield, said: "Weaker sentiment will likely persist in the near term. There is a steady stream of new launches in the pipeline due to the five-year Additional Buyer's Stamp Duty (ABSD) deadline, which means buyers are also spoilt for choice."

Based on caveats registered to date in URA Realis, there were 3,215 transactions of private homes in the first quarter, a sharp 40 % drop from the 5,328 recorded a year ago, JLL Singapore's senior director of research and consultancy Ong Teck Hui noted.

The price decline in the first quarter of this year was due to a 1 % fall in the prices of non-landed condominiums and private apartments, which had edged up 0.5 % in the previous quarter.

Giving a breakdown by location, prices of non-landed homes fell 2.9 % in the prime areas or core central region (CCR), the sharpest quarterly drop for prime areas since a 5.2 % fall in the second quarter of 2009 in the aftermath of the global financial crisis, analysts say. This compared with a 1 % drop in the fourth quarter of last year.

Compared to the other sub-markets, the prime districts have been most affected, as the increase in ABSD rates dampened demand from investors and foreigners.

Ms. Tricia Song, head of research for Singapore at Colliers International, said: "The decrease in Q1 non-landed CCR prices was much steeper than our expectation. The decline in median prices for certain projects could have contributed to the sharper drop as developers seek to clear inventory in ongoing launches." These included Marina One Residences, Martin Modern, New Futura and TwentyOne Angullia Park, she said.

The only bright spot was the landed segment, where prices defied gravity and gained 1.1 % over the previous quarter, following a 2 % fall in the fourth quarter. Ms. Li cited the perception that "on a per square foot (psf) basis, the landed segment was still a value-for-money play".

Prices of non-landed properties in the suburbs or outside central region (OCR) and in the city fringes or rest of central region (RCR) remained unchanged, partly due to the announcement of the Cross Island Line.

Prices in the RCR dipped by 0.2 % after rising 1.8 % in the previous quarter, due to a lack of new launches in the area in the first quarter, Ms. Li said.

Prices in the OCR were unchanged after registering a 0.7 % rise in the previous quarter. This segment bucked the trend as transactions picked up 5 % quarter on quarter to 1,535 units, with progressive take-up in large launches, particularly those near the Cross Island Line stations, Ms. Song said.

Mr. Ong noted that mass-market suburban projects continue to draw buyers, as developments such as Affinity at Serangoon, Riverfront Residences, Treasure at Tampines and Parc Botannia in Fernvale Street, where median prices ranged from $1,311 psf to $1,498 psf, are within the comfort zone of upgraders and those looking for a more affordable home.

But Ms. Li said "less than ideal" take-up rates in recent launches are likely to nudge developers to price the projects more sensitively in the coming months if they want to move sales and better manage sales inventory.

The URA's flash estimates are compiled based on transaction prices given in contracts submitted for stamp duty payment and data on units sold by developers up till mid-March. Last year, prices of private homes rose 7.9 %, faster than the 1.1 % increase in 2017.

Adapted From The Straits Times, 2 April 2019