The overall residential price index for private residential properties saw its first decline last quarter after five consecutive quarters of recovery since 2Q2017. Prices fell by 0.1% q-o-q, compared to a 0.5% q-o-q increase in 3Q2018, showed the latest URA statistics. This decline is “unsurprising” considering the combined impact of the July property cooling measures and revised guidelines introduced over 2H2018, says Desmond Sim, CBRE’s head of research, Singapore & Southeast Asia.

For the whole of 2018, prices of private residential properties rose by 7.9% y-o-y, compared to the 1.1% y-o-y increase recorded in 2017. The price increase last year is likely attributed to sales during the first half of the year, says Christine Sun, head of research and consultancy at OrangeTee & Tie. “(At the time) many new homes were sold at relatively high prices on the back of the market exuberance seen in the latest collective sales cycle,” she adds.

For the whole of 2018, both the landed and non-landed sectors of the property market recorded increases in overall prices. For the whole of 2018, prices of landed properties rose by 6.3% y-o-y, while non-landed properties recorded an 8.3% y-o-y price increase. However, landed home prices are still 9.1% below their peak in 2013, says Tricia Song, head of research for Singapore at Colliers International.

The price growth recorded this year was largely fuelled by a pent-up demand for private homes, attractive new launches, and a more positive economic outlook for the local economy, she says. “However, we do not expect private home prices to continue to rise rapidly in view of the new property curbs implemented last July,” she adds.

Landed properties and CCR prices fall

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The prices of landed properties fell by 2.0% q-o-q last quarter, and property prices in the city centre, or Core Central Region (CCR), declined by 1.0% q-o-q. This is compared to 3Q2018, which saw a 2.3% q-o-q drop for landed properties and 1.3% q-o-q increase in CCR property prices. The 4Q2018 decline in CCR prices is likely to have stemmed from resale transactions as prices in luxury developments like 8 Saint Thomas, New Futura, and South Beach Residences have been holding up, says Song.

In 4Q2018, 8 Saint Thomas sold 22 units at a median price of $3,238 psf, improving from $3,226 psf across 20 transactions in the previous quarter; New Futura sold 11 units at a median price of $3,721 psf, compared to $3,559 psf over 15 units sold in 3Q2018; and South Beach Residences transacted 24 units at a median price of $3,354 psf, compared to just three units sold for $3,308 psf in 3Q2018.

Song expects CCR prices to increase by 5% for the whole of 2019, supported by underlying demand for prime district homes and new launches.

The relatively poorer performance of these two segments may have dragged down the overall residential price index in 4Q2018, says Sim.

RCR prices boosted by new launches

Meanwhile, the Rest of Central Region (RCR) and Outside Central Region (OCR) both recorded relatively healthy growth, says Sim. The RCR was the best performing segment, with prices rising 1.8% q-o-q, compared to a 1.3% fall in the previous period, while prices in the OCR increased by 0.7% q-o-q, compared to a 0.1% q-o-q decrease in 3Q2018. The 4Q2018 prices of non-landed properties in the OCR were close to their previous record high in 3Q2013, says Sun.

These segments benefitted from successful new launches, such as Parc Esta which launched on Nov 18, and Stirling Residences which launched on July 5, says Sim. Parc Esta sold 329 units (73%) out of 450 units released and the average price was $1,680 psf, according to developer MCL Land at the time. The 1,399-unit condominium is about 30% sold to date. Meanwhile, Stirling Residences was launched on the evening of July 5, a day before the newest property cooling measures were implemented. The condo is about 40% sold to date, and the average price for units sold from Jan 1 to 19 this year is $1,750 psf.

Song expects RCR private home prices to increase by 3% this year, also on the back of expected new launches. Meanwhile, she expects prices in the OCR to remain flat this year, due to the substantial pipeline of new supply, like the 2,225-unit Treasure at Tampines and 1,410-unit The Florence Residences.

Resale sellers weary of price adjustments

Private resale transactions accounted for 51.1% of all sale transactions last quarter, rising from 46.3% in the previous quarter. Meanwhile, the whole of 2018 saw 13,009 resale transactions compared to 14,043 transactions in 2017. In this segment, the number of units sold in 2H2018 was 44.5% lower than that in 1H2018, says Ismail Gafoor, CEO of PropNex Realty.

“We believe individual owners are weary of adjusting their prices in the aftermath of the property cooling measures, as buyers decide to wait on the sidelines trying to comprehend market sentiment,” he says. This also indicates that “quite a number of en bloc (beneficiaries last year) did not buy a replacement home in the resale market”, says Lee Sze Teck, head of research at Huttons Asia.

In contrast, developers have been quick to react to the latest property cooling measures by “offering buyers and investors discounts, through the adoption of sensitive pricing strategies, as well as offering more new launches in 2H2018”, he says. This contributed to a 22.8% increase in the number of new units sold, he adds.

Disappointing take-up at recent new launches

For the whole of 2018, developers sold 8,795 new units, which is 16.8% lower than the 10,566 units sold the year before. This is despite launching more units into the market, with an injection of 8,769 units last year compared to 6,020 in 2017, says CBRE’s Sim. “Recent launches (are also) showing disappointing take-up rates,” he says.

Three new developments have been launched for sale so far this month. Luxury condo Fourth Avenue Residences sold 70 units over its weekend launch on Jan 19 and 20, which is about 15% of the total number of units in the development. The average price was $2,375 psf. Meanwhile the 140-unit RV Altitude and 71-unit Fyve Derbyshire sold 14% and 18% of their total units, with prices ranging from $2,729 psf to $3,100 psf and $2,200 psf to $2,700 psf respectively.

Recent new home sale volumes could still be considered “healthy” as the fall in transaction volume is still not as significant compared to 2013 after the Total Debt Servicing Ratio and Additional Buyer's Stamp Duty hikes were implemented, says Sun of OrangeTee & Tie. “Developer home sales fell 50.4% y-o-y” during that period, she says.

Today, overall private residential prices are 3.2% lower than their peak in 2013, before the measures were implemented, says Song of Colliers International.

Homebuyers spoilt for choice

As of end-2018, there were 35,649 unsold private residential units from already launched projects. The number of unsold units has increased from 30,467 units at end-3Q2018, and 26,943 units at end-2Q2018, according to URA statistics. More than 19,000 new private homes are expected to be launch-ready this year, and there is a potential supply of 9,800 units from government land tenders and private collective sales which have not yet been granted their planning approvals, says Sim. The availability of mega-launches comprising more than 1,000 units, such as Treasure at Tampines, the former Normanton Park, and the former Park West, will provide “a constant stream of new projects”, says PropNex’s Ismail.

Homebuyers looking for new private residential homes will be spoilt for choice this year, given the large selection of projects expected to launch this year. “Amid cautious and tepid sentiments, demand will also be kept in check with tighter financing requirements as well as higher financing costs in a rising interest rate environment,” says Sim.

Sun of OrangeTee & Tie also expects some investors to return the property market this year. “They consider residential properties to be a better investment alternative now, amid an uncertain (global) economy and unstable stock market,” she says.

Prices to rise slightly this year

Assuming the local job market remains healthy and the global economy does not deteriorate drastically, Sun expects overall private property prices to remain flat or rise marginally this year. “Prices may rise marginally for selected areas as the land price of some new projects are relatively high,” she says. She estimates that the overall price of private residential homes may increase by 1% to 3% this year.

“The rise in home values (this year) would likely be led by the CCR, which will potentially see several new project launches,” says Song. Based on successful collective sales last year, upcoming launches in the prime districts would include the former Makeway View, and former Dunearn Gardens, as well as the former Hollandia and Estorill.

New home sales are also expected to achieve about 9,000 units sold this year, and the resale segment is likely to sell between 10,000 and 11,000 units this year, fuelled by en bloc sellers looking for replacement homes, says Ismail.

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