Prices of private homes rise 0.5% for 3Q2018

By Charlene Chin

/ EdgeProp Singapore |

October 26, 2018 5:18 AM SGT

Prices of private residential homes have risen by 0.5% in 3Q2018, compared to an increase of 3.4% in 2Q2018, and a 3.9% rise in 1Q2018, based on URA data.

Property consultants have attributed the smaller increase in prices to the introduction of the property cooling measures on July 6 and the Hungry Ghost Festival, which slowed down the speed of transactions in the market.

Some segments of the property market have, however, remained resilient. Prices of landed properties rose by 2.3%, an improvement from the 1.7% increase from flash estimates.

Property consultants have attributed the smaller increase in prices to the introduction of the property cooling measures on July 6 and the Hungry Ghost Festival (Photo Credit: Samuel Isaac Chua/EdgeProp Singapore)

The price index in 3Q2018, however, is still 7.3% lower than its peak in 3Q2013, before prices for landed homes declined due to the cooling measures enacted then, highlights Ong Teck Hui, national director of research & consultancy at JLL.

Prices of non-landed homes in the Core Central Region (CCR_ increased for the fifth consecutive quarter, by 1.3%, compared with a 0.9% increase in the previous quarter. Resale properties in the region may have asked for higher prices, as the supply of completed homes in the region is diminishing, says Christine Sun, head of research & consultancy at Orange Tee & Tie.

“Some buyers, especially high net worth individuals, were also observed to be willing to pay the higher Additional Buyers’ Stamp Duty”, adds Orange Tee’s Sun. The buyers were expecting prices of new luxury homes to trend upwards, as units slated for launch from the recent enbloc sites were bought at higher land prices, it says.

Some new launches after the cooling measures have seen fairly high take-up rates such as Mayfair Gardens (38%) (Credit: Property Agent)

“These higher networth buyers may be willing to fork out the increased ABSD rates if they find a property they like. Most are buying high-end projects for the longer term and they are not buying for speculation,” says Eugene Lim, key executive officer of ERA.

Home values in the Rest of Central Region (RCR) fell by 1.3% in 3Q2018 - after a 5.6% jump in 2Q2018 – as selected projects cleared their remaining inventory at a discount. Sixteen35 Residences sold 11 units at a median price of $1,429 psf, 5% lower than the median price of $1,507 psf when it was launched in Q2. While some new launches after the cooling measures have seen fairly high take-up rates such as Mayfair Gardens (38%), many others have seen lower take-up rates which will likely keep any price increase in check.

However, in 4Q2018, there are several relatively attractive offerings that bear watching: 1,399-unit Parc Esta near Eunos MRT Station; the first mixed integrated development in Bidadari -- 667-unit Woodleigh Residences; the 716-unit Whistler Grand at West Coast Vale: and548-unit Kent Ridge Hill Residences.

Whistler Grand is one of the upcoming launches in 4Q2018 (Photo Credit: City Developments)

There were 5,765 transactions in 3Q2018, comprising 3,102 new home sales and 2,753 resale and subsale units. This represents a 19.8% increase over Q22018, and a 13.9% increase over Q32017. Meanwhile, new home sales increased by 27.4% q-o-q, and saw a 13.1% rise y-o-y.

The cooling measures had a significant impact on the resale market. In 3Q2018, 2,672 resale units were transacted, a 43.1% q-o-q drop from 4,700 units the previous quarter, observes Ismail Gafoor, chief executive officer of PropNex Realty.

Looking ahead, property consultants do not foresee new home prices falling, due to the high land bid costs. In 2019, PropNex estimates that prices of private residential properties to grow between 2 to 3%.

Credit: Cushman & Wakefield research

Cumulatively, private home prices have climbed by 7.9% in the first three quarters of 2018, says Tricia Song, Colliers International head of research for Singapore. This is 9.6% above the recent trough in Q2 2017. Home values are still 3.2% lower than the peak in Q3 2013.

Though the new cooling measures had a substantial impact on demand, it is not as bad as the period when the total debt servicing ratio (TDSR) loan framework was implemented at the end of June 2013. Transaction volume only fell 19.8% q-o-q in 3Q2018, compared to 42.2% q-o-q in 3Q2013,after TDSR was implemented. This shows that demand remains resilient and many are still positive on the long term prospects of real estate investment in the Singapore private residential market.

Addressing the pipeline of 50,330 new homes that will come into the market in the future, ERA’s Lim believes that this will “not have a significant downward impact on prices in the short term”. As developers have five years to sell these units, this translates to 10,066 units a year to be sold, says ERA.

HDB resale properties reflects continuous demand, especially for five-room fkats (Photo Credit: Samuel Isaac Chua/EdgeProp Singapore)

Effective Jan 17 next year, private residential developers will be restricted in the maximum number of units that can be built for developments outside of the Central area. To that end, ERA believes that the new guidelines “may have the unintended side effect of hastening investment purchases of smaller-sized units, as purchases can expect the supply of small units to be very limited in the future”.

Investors typically prefer small units which are cheaper, as they aim to achieve their target yield rates from rentals, says ERA.

Meanwhile, public housing has seen the highest take-up rate, at 7,063 transactions in Q32018. This is the highest sales since 3Q2010, where 8,205 transactions occurred.

“HDB resale properties reflects continuous demand, especially for five-room and Executive units which draw interests from former en bloc owners who are attracted by their size and affordability”, says PropNex’s Gafoor.

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)Whistler Grand Mayfair Gardens

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