Q2 2020 private residential property prices rose reversing flash estimates

Q2 2020 private residential property prices in Singapore surprisingly rose, despite the quarter bearing the full brunt of two months of ‘circuit breaker’ in April and May that came about due to the coronavirus (COVID-19) outbreak.

Final statistics from the Urban Redevelopment Authority (URA) on Friday, 24 July, showed that Q2 2020 private residential property prices rose by 0.3% quarter-on-quarter (QOQ), reversing the flash estimates of a 1.1% decline, and the 1.0% decline in Q1 2020.

This brings private residential prices to a slight decline of 0.7% for the first half of 2020, after a full year gain of 2.7% in 2019. Private home prices are now 1.9% above the most recent peak in Q3 2018 and just 1.3% below its all-time peak in Q3 2013.

Colliers International commenting on the Q2 2020 private residential property prices data said it believes the overall private residential market is largely stable, albeit patchy. Q2 2020 private residential property prices data showed that after a two-month circuit breaker, transactions have rebounded quickly in June, reflecting pent-up demand. Depending on the duration and extent of the economic fallout of COVID-19, it expects private home prices and takeup could drift lower in second half of 2020.

Q2 2020 private residential property
Q2 2020 private residential property prices in Singapore surprisingly rose (image: Colliers International)
Q2 2020 private residential property price analysis by regions

The price recovery in Q2 2020 was uneven, with the increase led by the Core Central Region (CCR) non-landed segment which rose 2.7% QOQ. Outside Central Region (OCR) prices rose 0.1% QOQ, while the landed segment was flat. The Rest of Central Region (RCR) prices fell 1.7% QOQ.

Core Central Region (CCR)

According to URA’s data, prices in the CCR rose 2.7% in Q2 from the previous quarter, after falling 2.2% QOQ in Q1 2020. This brings CCR home values to be up 0.4% in H1 2020, 2.3% below its recent peak in Q3 2018 and 4.7% below its all-time peak in Q2 2013.

A closer look at the transactions during the quarter suggests that the prices at most new projects were at best flat and we have seen some deep discounts at selected completed projects such as:

  • 38 Jervois which recorded 14 caveats in Q2 at a median price of S$2,052 psf, compared to one unit sold at S$2,492 psf in Q2 2019;
  • 8 Saint Thomas which recorded 14 caveats in Q2 at a median price of S$2,730 psf compared to earlier units sold at S$3,100 – 3,200 psf.

That said, some larger recently-completed projects in the financial district had seen renewed interest in 1H 2020. Marina One Residences sold 78 and 35 units in Q1 and Q2 2020 at median prices of S$2,295 and S$2,312 psf respectively. V on Shenton sold 2 and 7 units at median prices of S$2,344 and S$2,338 psf in Q1 and Q2 respectively.

Rest of Central Region (RCR)

Home values in RCR fell the most in Q2, by 1.7% QOQ, after declining 0.5% in Q1. This brings RCR home prices to be down 2.2% in 1H 2020, and 3.6% below the peak in Q2 2013. The popular large launches such as Parc Esta, Stirling Residences and Jadescape have sold 137, 105 and 94 units respectively in Q2, despite the circuit breaker, and Colliers notes that their prices have largely held up. The decline in the price index could be due to some distressed sales in the secondary market.

Outside Central Region (OCR)

Non-landed home values in OCR rose 0.1% QOQ in Q2, following a 0.4% decrease in Q1 2020. This brings OCR prices to be down 0.3% in 1H 2020. Colliers believes the relative resilience in OCR home prices is due to their relative affordability and lack of future new supply in OCR.

In particular, some earlier launches such as Treasure at Tampines and Florence Residences continued their progressive takeup:

  • Florence Residences sold 150 units at a median price of S$1,513 psf, compared to 56 units at S$1,497 psf in Q1 2020;
  • Treasure at Tampines moved 185 units at S$1,357 psf in Q2, compared to 215 units at S$1,363 psf in Q1.

Developers sold 1,713 new homes excluding Executive Condominiums (ECs) in Q2 2020, down by 20.3% QOQ (2,149 in Q1 2020) and 27.1% year-on-year (YOY) (2,350 in Q2 2019). This brings 1H 2020 new sales to 3,862 units, 7.8% below 1H 2019’s 4,188 units.

Meanwhile, secondary (resale and subsale) transactions stood at 951 units in Q2, a 55.1% decline from the 2,120 units in Q1 2020 and a 60.6% decline YOY (from 2,416 in Q2 2019). This brings 1H 2020 secondary sales to 3,071 units, 28.9% below 1H 2019’s 4,321 units.

This shows that the halt in physical viewings during the circuit breaker had a more severe impact on the secondary market than the primary market. Virtual viewings were less reassuring for pre-owned ones than for brand new units.

Supply pipeline, vacancy, unsold inventory

In Q2 2020, due to the halt in construction projects island-wide, only 86 private homes (excluding ECs) obtained Temporary Occupation Permit (TOP), down significantly from the 1,528 completed in Q1 2020 and the 2,298 private homes completed in Q4 2019.

Together with 1,459 private homes to be completed for the rest of the year, Colliers expects 2020 completions to come in at 3,073 units, halved the forecast as of end Q1 2020, due to delays in construction. The number of completions in 2020 will be significantly below the 10-year historical average of 12,948 units.

In 2021, completions will likely rise to 12,932 private homes, and further to 14,878 units in 2022, and 16,265 units in 2023, with delays likely to push the completions into 2024. For the non-landed segment, with minimal net new demand as well as completed stock, the vacancy rate was maintained at 5.6% in Q2. The peak vacancy was 10.4% in Q22016.

Unsold inventory eased to 27,977 units by end-June 2020, compared to 29,149 units in Q1 2020. Assuming the take-up of 8,000-10,000 units a year, it will take three to three and a half years to clear.


The overall private residential rental index declined 1.2% in Q2 2020, reversing its 1.1% increase QOQ in Q1 2020. This brings the private residential rental decline in 1H 2020 to 0.2%. Overall rents are still 11.8% below the peak in Q3 2013.

The decline in Q2 2020 was led by the landed segment (-2.3%) and RCR (-1.9%). Colliers International expects overall rents to stabilise in 2020, as the economic fallout from the COVID-19 pandemic should be offset by the minimum new completions.

While expat demand may decline due to loss of jobs and pay reductions, rents are unlikely to crash as completions in 2020 will be significantly below the 10-year historical annual average of 12,948 units, with potential delays, and vacancy remains tight below the historical average of 8%.

Ms Tricia Song, Head of Research for Singapore at Colliers International, giving her take on the outlook for the future based on Q2 2020 private residential property data said:

“As showflats are allowed to reopen with effect from 19 June, June developer sales have more than doubled QOQ, reflecting pent-up demand from the two-month circuit breaker.

With this encouraging rebound in sales, developers may launch more projects going forward. Major projects that could be launched include: 633-unit Forett@ Bukit Timah, 566-unit Penrose at Sims Avenue and 640-unit Clavon at Clementi Avenue 1.

After the initial pent-up demand, we expect the sales could start to slow down as job losses and economic realities sink in. We expect 2020 developer sales to fall 29% to 7,000 units from the 9,912 units in 2019.

On 26 May, the Ministry of Trade and Industry (MTI) revised Singapore’s GDP growth forecast for 2020 downwards to “-7.0 to -4.0%”. More job losses could also be expected. With home prices highly correlated to household income and job security, we expect private residential prices could decline 5% in 2020, in line with the economic contraction.

We do not expect a hard landing for the property market. The property cooling measures — progressively implemented over the last 10 years — have helped temper price increases, bringing prices more in line with underlying economic fundamentals. The stabilisation of the property market has substantially reduced its vulnerability to the COVID-19 shock.

In addition, new temporary relief measures in response to Covid-19 such as the deferral of mortgage payments til end-2020, along with lower interest rates, should support housing demand and holding power. 3M SIBOR, a benchmark rate typically used in mortgage loans, has retreated 156 bps to 0.44% by mid-July 2020 from the peak of 2.0% a year ago.”

Written by Ravi Chandran

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