Private home prices fall 1% in Q1

SINGAPORE — Private home prices fell more moderately in the first quarter than earlier estimated, but analysts warned that the pace of decline could accelerate in the coming months in the face of mounting housing supply and rising interest rates.

Prices were down 1 per cent in the first quarter from the previous three months, the Urban Redevelopment Authority (URA) said yesterday.

It was slightly slower than the 1.1 per cent drop in its flash estimate released at the beginning of the month, which was also the rate of decline in the final quarter of last year.

From the recent peak in the third quarter of 2013, prices have fallen 5.9 per cent in six consecutive straight quarters of decline, as the rise in interest rates and supply of new homes add downward pressure to a market that has been hit by repeated rounds of cooling measures and loan curbs.

“To entice homebuyers, some developers priced projects attractively, while others offered discounts,” said Ms Chia Siew Chuin, director of research and advisory at property firm Colliers International.

In the non-landed private housing segments, declines were observed across all areas, with homes in the Rest of Central Region (RCR), or city fringes, leading the fall at 1.7 per cent.

Homes in the Outside Central Region (OCR), or suburbs, and those in the Core Central Region (CCR), or city centre, followed with declines of 1.1 per cent and 0.4 per cent, respectively. Meanwhile, prices of landed properties fell by 0.9 per cent.

New home sales volume also decreased in the January-to-March period, with developers selling 1,311 homes, fewer than the 1,376 units in the previous three months.

That was largely due to fewer launched units in the first quarter, when 1,189 homes were released into the market, down from 1,592 units in the fourth quarter last year.

“Developers launched fewer units possibly to allow sales of already launched projects to catch up … Typically, developer sales are driven by the number of new launches and fewer units launched would have resulted in the lower rate of sales,” said Mr Eugene Lim, key executive of property agency ERA.

With unsold inventory that has met prerequisites for sale climbing 16.4 per cent from the previous quarter to 21,675 homes in the first three months of the year, homebuyers are expected to continue to stay on the sidelines in anticipation of further price corrections, while investors are hesitant to commit in the face of a weak leasing market, analysts said.

“Coupled with interest rates, which have already increased sooner and steeper than expected, homebuying momentum will remain curbed,” Ms Chia said.

Meanwhile, sliding Housing and Development Board (HDB) resale prices will also continue to dent private home demand, especially from upgraders.

Ms Christine Li, director of research at Cushman and Wakefield, noted that the share of non-landed private homebuyers with HDB addresses has retreated to 46.6 per cent in the first quarter from 48.7 per cent last year.

“We think private home prices will decline by 5 to 7 per cent for the whole of 2015 since demand is waning,” said Ms Li. Her forecast is steeper than the 4 per cent fall recorded last year.