Singapore private residential market showed unexpected rise in prices in Q2

The Singapore private residential market showed its resilience, posting an unexpected rise in prices in Q2 2019. Colliers International said the Singapore private residential market price rise is led by the non-landed private residential segment.

Singapore private residential market saw home values rising by 1.5% quarter-on-quarter (QOQ) in Q2, overturning the 0.7% decline in Q1 2019. It is also higher than the 1.3% QOQ growth flash estimate released earlier this month.

Tricia Song, Head of Research for Singapore, Colliers International commenting on the Singapore private residential market performance said: “While it is true that this is the first quarterly increase in private home prices since the property cooling measures were introduced in July 2018, we do not think this price growth is sustainable as buyers remain value-conscious and particularly given the macroeconomic headwinds and trade tension which have cast a pall over Singapore’s economic outlook. Developers would be mindful of these factors in pricing their units.”

“Developers sold 2,350 new homes in Q2 2019 – up by 27.9% QOQ (1,838 in Q1 2019) but down 5.1% year-on-year (YOY) (2,476 in Q2 2018). Meanwhile, secondary (or resale) transactions stood at 2,416 units in Q2 2019, up 26.8% QOQ (from 1,905 in Q1 2019) but down 49.9% YOY (from 4,820 in Q2 2018). The July 2018 measures appeared to have impacted the secondary market more than developer sales, as the increased availability of new attractive projects from developers possibly diverted demand from the secondary market.

Taking in the price increase in Q2, overall private home values have risen by 0.8% in the first half of 2019 and is now 2.5% below the Q3 2013 peak.

The Q2 rise in home values was led by non-landed homes (+2.0% QOQ) which displayed broad-based increase across all segments: core central region (+2.3%), rest of central region (+3.5%), and outside central region (+0.4%). Meanwhile, landed home prices weakened by 0.1% QOQ in Q2 2019, following a 1.1% increase in the previous quarter.”

Ms Catherine He, Associate Director of Research at CBRE, commenting on the Singapore private residential market performance said: “A year after the latest measures were implemented, prices displayed resilience to register a healthy rebound this quarter.”

She noted that this happened after two consecutive quarters of decline, bringing the year to date change for 2019 to +0.8%. Growth came from the strong performance in the high-end segments (RCR and CCR). The only decline was from the landed segment, where there were no new launches.

“The RCR segment was the strongest performer coming in at an increase of 3.5% q-o-q. This can be attributed to the few successful launches such as Amber Park, The Tre Ver and Parc Esta, which were launched at higher prices, on the back of their higher land costs as they were secured during the collective sale blitz in the last two years. Sales at these projects were driven by intrinsic attributes such as location, tenure and reputation of the developers, as well as extrinsic factors such as higher incentives for agents.

“With the healthy take-up, it is reassuring to note that unsold inventory has been reduced to 33,673 units, compared with 36,839 units in the previous quarter. This is in addition to the 7,100 units which have not been granted planning approval – indicating that the market is absorbing the supply at a healthy clip.

“CBRE Research opines that the property price index should remain stable or show moderate growth for the rest of the year. Downward pressure is likely to come only in the mid to longer term with the impact of the weaker macroeconomic environment setting in, and when developers are compelled to reduce prices as their sell-by deadlines approach. This demonstrates that the measures implemented last year have achieved their intended effect of stabilizing the market and preventing runaway home prices.”

Core Central Region (CCR)
According to URA’s data, prices in the CCR increased 2.3% from the previous quarter. This partially reversed the sharp quarterly price decline of 3.0% for the CCR segment in Q1 2019. It also reduced the total decline in CCR prices to 1.8% since its recent peak in Q3 2018.

Rest of Central Region (RCR)
RCR rose 3.5% in Q2, after falling 0.7% in Q1, bringing YTD uptick to 2.8%. We believe the increase was due to brisk sales at high price points achieved in new freehold launches predominantly in the East Coast, such as Amber Park, Coastline Residences and MeyerHouse, which sold 156/13/5 units at SGD 2,476/ 2,533/ 2,574 psf in Q2 2019 respectively.

Outside Central Region (OCR)
OCR prices rose the least, at 0.4% QOQ, but they have been rising for the third straight quarter, with a YTD increase of 0.6%. Performance at the four (and freehold) launches in Q2 in the OCR had been mixed.

Landed Homes
Prices of landed properties dipped 0.1% QOQ after increasing by a surprise 1.1% in Q1 2019.

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