Private home prices increase at slowest pace in five quarters

SINGAPORE — The Republic's private home prices grew at the slowest pace in five quarters between July and September, following the cooling measures introduced on July 6.

Based on flash estimates from the Urban Redevelopment Authority (URA) released on Monday (Oct 1), prices rose 0.5 per cent in the third quarter of the year, compared with increases of 3.4 and 3.9 per cent in the second and first quarter, respectively.

Analysts said the slowdown in the price increase was within expectation, and it showed that the Government’s intervention has managed to curb the exuberance in the market.

Going forward, most analysts expect private home prices to grow marginally or remain flat. But some said prices may decline in the next few quarters. “Fourth quarter’s (price growth could be) a small negative or small positive. I’m factoring in the possibility of a contraction”, said real estate consultancy ZACD’s executive director Nicholas Mak.

Mr Mak predicts prices will increase 6 to 8.5 per cent this year compared to 2017. Other analysts were more bullish in general, expecting the increase this year to reach 8 to 10 per cent.

The latest round of cooling measures saw the Additional Buyers’ Stamp Duty (ABSD) raised for individuals by 5 per cent and entities by 10 per cent.

The loan-to-value limits for home buyers were also tightened by 5 per cent.

URA data showed that private home prices in the Core Central Region rose the most at 1.2 per cent, compared with a 0.9 per cent in the previous quarter.

Prices in the Outside Central Region (OCR) inched up 0.1 per cent, compared with a 3 per cent increase in the previous quarter, while those in the Rest of Central Region (RCR) saw a drop of 0.8 per cent, compared with an 5.6 per cent increase in the previous quarter.

Apart from demand taking a hit, developers were selling their units in the RCR at lower prices in order to clear their inventory, the analysts said.

Ms Tricia Song, head of research at real estate firm Colliers International, said The Poiz Residences at Macpherson was sold at a discount by its developer MCC Land— at about S$1,320 psf.

The Tre Ver at Potong Pasir was also sold at a lower-than-expected price of S$1,550 psf.

Ms Song said new launches in the fourth quarter, such as Jui at Serangoon, Parc Esta at Eunos and Mayfair Gardens at Bukit Timah, could also be priced lower than what was expected before the cooling measures.

Mr Ong Teck Hui, national director for research and consultancy at JLL, noted that the median prices of three projects — The Verandah Residences in Buona Vista, Margaret Ville at Commonwealth and Amber 45 at Marine Parade — were launched in the second quarter at above S$1,800 psf. But the prices of launches in the third quarter were below that level.

“Out of 18 new sale projects that had transactions in (the second and third quarter of 2018), 72 per cent of them recorded lower psf prices. Consequently, median prices of new non-landed homes in RCR fell from $1,885 psf in (the second quarter) to $1,706 psf in (the third quarter),” Mr Ong added.

CBRE head of research for Singapore and Southeast Asia Desmond Sim said the “resilience” of developers would continue to prop up property prices on a psf basis on the back of higher land costs.

While he does not expect prices to decline, he predicts that they will increase by less than 1 per cent each quarter for the next few quarters.

Other factors driving price growth would include firm economic growth, rising affluence, a stable labour market, and Singaporeans’ thirst for real estate investment, said Ms Christine Li, the senior director of research at property brokerage Cushman & Wakefield.

Moreover, developers are still flush with cash and have strong holding power. “As most of the new launches were from land sales in the past one and half years or so, developers do not face immediate threat from the ABSD deadlines which give them five years from the date of land acquisition to sell out their projects,” she said.

Meanwhile, the resale prices of public housing flats dipped 0.2 per cent in the third quarter, reversing from a 0.1 per cent increase in the previous quarter, based on flash estimates from the Housing & Development Board (HDB).

Prior to the increase in the second quarter, HDB resale prices had declined for six consecutive quarters.

Mr Mak attributed the latest decline to growing concerns about the depreciating values of ageing flats.

While Mr Mak expects HDB resale prices to fall 1 to 2 per cent for this year, ERA key executive officer Eugene Lim believes that demand will pick up in the remaining months.

Mr Lim felt that the lease decay issue has been largely addressed by Prime Minister Lee Hsien Loong during this year’s National Day Rally when he announced several new housing schemes, including the Voluntary Early Redevelopment Scheme (Vers) and the extension of the Home Improvement Programme (HIP).

“Although the finer details (of Vers) have yet to be announced, it should put residents’ mind at ease over the future of their HDB flats,” Mr Lim said. 

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