Private home prices up in Q3, first time in 4 years

SINGAPORE — In a sign that the Singapore property market has turned the corner, private home prices rose for the first time in nearly four years in the third quarter, latest flash estimates from the Urban Redevelopment Authority on Monday (Oct 2) show.

Prices went up 0.5 per cent in the three months ended Sept 30, versus the 0.1 per cent decline between April and June.

The last time private home prices went up was in the third quarter of 2013, but the rise then was the slowest in six quarters — the Government had just announced new curbs on the Total Debt Servicing Ratio (TDSR) at that time, denting affordability of homes and prompting buyers to be more prudent.

The private residential property price index now stands at 137.3 points, whereas the figure was a record 154.6 points before going on 15 straight quarters of decline. Flash estimates are compiled based on transaction prices in contracts submitted for stamp duty payment and data on units sold by developers until mid-September.

Mr Eugene Lim, key executive officer of ERA Realty Network, saw the price index increase “as a strong signal that the market has turned”.

But he added: “However, as the TDSR framework continues to keep a lid on prices, we are expecting any price increase to be gradual.”

Given the modest price decline in the second quarter, the positive growth did not come as a surprise for many, added chief executive of PropNex Realty, Mr Ismail Gafoor.

Based on the positive sentiment in both primary and secondary markets and a sense of greater urgency by buyers and investors, Mr Ismail predicts that overall prices this year might possibly increase to 1 per cent as compared to a decline of 3.1 per cent in 2016.

“Moving forth, we are expecting 21,000 to 23,000 units to be sold for 2017 (new and resale); an increase of 28 per cent to 40 per cent over last year’s total of 16,378 units. Prices are expected to remain (relatively flat); possibly moving within the range of 0 per cent to 1 per cent for the whole year,” said Mr Lim.

In the latest estimates, prices of private residences in the suburbs, or outside central region (OCR) rose by 0.7 per cent, after a 0.3 per cent decline in the preceding quarter. In the city centre, or core central region (CCR), prices of non-landed private residential properties increased by 0.2 per cent, rebounding from a 0.5 per cent drop in the second quarter. Prices in the rest of the central region (RCR), or city fringes remain unchanged.

Last week, OCBC and Morgan Stanley had told clients they expected the first price upturn since 2013 in the third quarter of this year. Morgan Stanley had projected a 0.8 per cent quarter-on-quarter rise, while OCBC Investment Research wrote that it believed “the bottom is actually behind us”.

Some of the reasons cited for expectations of a turn in the property cycle include better sales volumes and higher prices at new launches this year.

In the first half of 2017, the total transaction volume in both the primary and secondary markets was 12,107 units, up 64 per cent compared to the first half of 2016.

Market sentiment has picked up considerably this year, despite the Government remaining firm that property cooling measures are unlikely to be lifted any time soon. In March, however, the Seller’s Stamp Duty was tweaked slightly, stoking buyer optimism. The duty, paid by sellers on residential properties, was reduced, while rules on loan thresholds were also eased slightly.