New home sales last month almost double that of June 2016

830 new residential properties were sold by developers in June this year, up almost 53% from the 536 units last year. Despite the usual June holiday lull, the number of units sold were not significantly lower than the 1,039 sold in May. The lack of new private property launches last month could have also accounted for the sub-1000-unit sales figures following 3 consecutive months of sales above 1,000 units. Only 159 units were launched in June, down from the 370 in May.

SantoriniWith the inventory of unsold units diminishing, and a much-reduced number of new units launched this year, the market could be headed towards a state of undersupply. Thus despite of and possibly because of the 15 consecutive quarters of weakening home prices and softening rents, buyers have been eager to pick up units this year.

The best-selling private condominium project in June was The Santorini in Tampines which sold 75 units at $1,026 psf while Sol Acres topped the executive condominium (EC) sector with 41 units sold at $829 psf. Some property experts are attributing the positive sales figures to higher unit prices since recent land bids have been running high. Prices of units at Commonwealth Towers for example stand at a median of $1,899 psf. With more new launches such as that of Martin Modern and LeQuest coming up in July, market activity could pick up even further.

Home prices fell slightly in Q2. Bottom could be in sight.

Home prices of private residential properties fell by 0.3% in the last quarter, though it is nothing to fret over as it is the smallest dip since Q4 of 2013, which was when prices started to show a decline.

Thomson Grand3Since the April 2013 peak, private home prices have fallen 11.6%. Nothing too alarming considering the rate of its fall, but nothing to scoff at either. After a year or so of buyers retreating from the market in wait of prices falling further, new launches this year have brought them out of the shadows and the overall market sentiment has been positive thus far.

The first indication of a possible market recovery in the near future is the slowdown in rate of decline of property prices. This could indicate that the bottom is nearing and may draw even more buyers into actually committing to a purchase – when the price is right.

Non-landed private residential properties in the “rest of central region” such as Marine Parade and Bishan fared the best last quarter, with a 0.5% growth. The core central region saw the steepest fall of 0.9% as most of the transactions recorded were from older establishments and from mortgagee sales.

Activity in the landed property market is surprisingly heightened last quarter, with 527 units sold, a whooping 56.8 per cent higher than in Q1. In the resale HDB flat front, prices fell very slightly at 0.1%, a smaller decrease compared to the 0.5% in Q1, though sustained interest may be questioned here as more buyers could be considering upgrading into the private property market as older HDB flats with fewer years left in their lease may mean fewer takers.

Resale private home prices fall in Q2

The first month of the second quarter ended with a slight fall in resale private home prices. The shift in the winds could be due to the higher number of new launches in April, with buyers’ attention turing towards new projects instead.

RiversailsOn a brighter note, demand for shoebox apartments seem to be on the rise, with consistently increasing numbers over the months of March and April. Figures for this segment are taken separately and have shown an 0.7 per cent rise in prices for these units with floor areas of up to 506 sq ft in April, following a 1.3 per cent rise in March. Property analysts are however wary of calling it a market rebound as the rental prospects for suburban smaller apartments are not yet on the road to recovery. Though there is a sense of the market picking up, most of the uptick have been focused on the developer sales segment. After a few months without new launches, buyers have returned to the new homes market with fervour, though most are in search of value-for-money deals targeted at property investment rather than on picking out units from the resale sector.

In the districts of 4, 9, 10 and 11, resale private home prices fell 0.5 per cent. Included in the core central region are the Central Business District (CBD) and Sentosa Cove. Prices of private non-landed properties have fallen 13.8 per cent since its 2013 peak and because of the debt servicing ratio limits placed on loans, buyers often have to be more selective of what their loans go towards. New properties are their product of choice for the moment.

With April’s price decline, could the bottom of the property cycle be in sight?

Overall price decline in Q1 but buying sentiment remains upbeat

Price-declines across the board for private residential, commercial and resale public housing sectors could mean the bottom of property cycle is close. For the 14th consecutive quarter now, private home prices have fallen, the longest period in the past 13 years.

That said, the general market sentiment has recently picked up as slight tweaks in the property cooling measures and a series of new and exciting property launches have gotten buyers’ blood flowing once more. Private home prices have fallen 0.4 per cent in Q1, slightly lesser than the 0.5 per cent in Q4 of last year.

Paya Lebar Quarter_Lendlease PLQPhoto credit: Lendlease 

Values of private residential properties have fallen 11.6 per cent since its peak in 2013, and this difference has probably revived purchasing interest as most buyers still see the potential of well-located properties in Singapore.

Total private home transactions hit 5,202 units in Q1, the highest in 15 quarters thus far. Property analysts are expecting the market to remain bullish and continue its growth barring any unexpected economic circumstances. City fringe properties are faring particularly, propped up by the strong demand for newly launched projects such as The Clement Canopy, Grandeur Park Residences, Park Place Residences and the Paya Lebar Quarter. Non-landed home prices have in fact risen 0.3 per cent in the city fringes and 0.1 per cent in the suburbs. Core central region property prices fell 0.4 per cent however.

ParkPlaceResidencesLanded home prices fell 1.8 per cent last quarter, likely due to the restrictions placed on these rarer commodities. Foreigners are not allowed to own landed properties. On the resale HDB flat front, prices fell 0.5 per cent, though the decline is expected to reverse itself soon, in response to the positive sentiments from the private property market.

Property cooling measures to stay put

National Development Ministry Lawrence Wong has recently mentioned that the curbs placed on the property industry are here to stay as demand for property not declined.

HillsTwoOneThough property prices may have fallen, the dip has been gradual and slow. Coupled with the fertile bedrock of low interest rate and affordable quantum pricing of residential properties, the authorities may be afraid of a sudden and unmanageable spike in demand from investors should the curbs be lifted anytime soon.

And their fears may not be entirely unfounded as the market has been showing budding signs of recovery in the past couple of months. Demand, in particular for smaller units in well-located properties, from local and foreign investors alike, have been on the rise while prices are beginning to hold steady. Pent-up demand from previous quarters of muted activity have meant a rise in sales volume.

SignatureECYishunBigger Central Provident Fund housing grants will be included in the upcoming Budget talks, which may sustain resale HDB flat volume as more buyers qualify for subsidies. Resale volume for the public housing sector has already risen 7.8 per cent last year. As demand for resale flat increases, so will pricing and sales volume. A stabilising resale flat market could also mean an increase in the number of HDB upgraders who are buying off the private property market, in turn boosting sales in the private housing sector as well.

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.

Rise in new private home sales volume

The number of new private homes sold last year have risen on the back of declining prices in the primary private home sales market. Fighting against predictions of a languishing private residential sector, new private home sales have held up in 2016 with 8,136 new units sold, 9.4 per cent higher than 2015’s 7,440.

SantoriniBuyers have been picking up units directly from developers, aided by a couple of pushes from low interest rates an and lower selling prices. Though 2016 was a slow year for Singapore’s real estate industry in terms of home prices, the number of transactions clocked have surprisingly went against all odds. While private home prices have fallen over the past 3 years, market sentiments have begun to pick up last year and increased interest and availability of one- and two-bedroom units whose total quantum prices were more palatable for the general buying public and investors alike.

In Q4 of 2016, 2,480 new units were sold, the highest number in a quarter for the year. Despite the year end’s usual market lull and only 90 new units launched in the last quarter, December’s sales were positive with suburban projects leading the way with 231 sales, followed by 112 in the city fringes and 24 in the core central region. Last month’s best seller was The Santorini in Tampines which sold 26 units at an average price of $1,046 psf.

Will property market bottom out soon?

Hopes of a market rebound may be reignited as the bottom of the cycle seems to be in close reach. While private home prices have fallen by 0.4% for the 13th consecutive quarter, the rate of decline of private home prices have been reduced from the 1.5% in 2016’s Q3.

cairnhillresidencesIn 2016, private home prices fell only 3%, the slowest since 2013. Since the third quarter of 2013, home prices have fallen 11.2%, with a 4% fall in 2014 followed by a 3.75% fall in 2013. The projected fall in home value this year is 2% to 3%. While home seekers and investors may be drawn back into the market with the lowered property prices, analysts are not expecting them to splurge.

highlandresidencesIn Q4 of 2016, non-landed private home prices fell 0.7 per cent, led by city fringe properties with a 2 per cent drop. Prices of units in the core central region remained unchanged while suburban home prices fell 0.3 per cent. Units in the core central region have suffered a 1.9 per cent fall in Q3, thus the fact that sales volume have increased while prices remained unchanged could be a good sign for the year ahead.

Landed property prices posted a surprising rise of 0.9 per cent after a 2.7 per cent fall in Q3 while in the resale HDB flat market, prices fell 0.1 per cent.