Consumer confidence in property market improving

Though gradual, the property market seems to be coming out of a long hibernation and there are some bright sparks to make 2017 a warm one.

VIIOThe supply and inventory stock is gradually diminishing, by 8.4 per cent at the end of last year, aided by the restriction in land supply by the government last year, the key word being gradual. Fortunately, the decline in home and rental prices have also been gradual, with no sudden collapse. Last year’s rate of decline of overall private home prices was at a 3-year low, at 3.1 per cent. The 2 years before saw a 3.7 and 4 per cent decline, counting backwards.

QuinterraBy now, consumers and investors are used to the price decline, which has been a regular occurrence since 2013 when the property cooling measures began to kick in. In the current market, any news of slower price declines will be good news, and of stabilisation, even better news. Private home prices have finally landed on a level where an increasing number of buyers find affordable and investment-worthy, which explains the boost in new home sales from 7,440 in 2015 to 7,972 last year.

Properties in the core-central region fared the best in the second half of 2016, while non-landed homes in the city fringe and suburbs registered 2 and 0.6 per cent drops respectively. Landed properties fared unexpectedly well with a 0.8 per cent price increase in Q4. Property analysts are expecting property prices to bottom out this year, which could the year when the property market bottoms out. The authorities do not yet seem to show any signs of easing the property cooling measures, at least not in the first half of the year.

New launches versus Completed private homes

As home supply inches towards a new high this year, the public’s attention may now be shifted to the competition between completed new homes and new developer launches.

Property investment was almost a sure thing not long ago, but now 3 to 5 years down the road from the peak of the market, when property prices were high but so were buying sentiment and potential investment yields, units which were launched then are now made available in the physical, adding pressure to the already-gluggy property market.

Private apartment prices in the core central region (CCR) have taken a turn for the better with a 0.4 per cent rise in the first quarter of 2016, following a 0.3 per cent fall in the last quarter of 2015. Luxury properties in the prime districts may once again be welcoming affluent buyers and investors as average unit prices have risen from $2,215 psf to $2,243 psf by the end of last year.

In the city fringes however, private property prices have continued to ebb, falling 0.4 per cent for 2 consecutive quarters now. Out of the central regions (OCR) and in the suburbs, prices fell 0.9 per cent. For the rest of the year, property experts are expecting private apartment prices to stabilise in the central regions while landed and suburban non-landed homes continue to struggle.