According to its latest flash estimates, the URA’s private residential property index rose 0.5% in 3Q2018. It is a “significant moderation” from the 3.4% increase in the previous quarter, and a sign that the property cooling measures implemented on July 6 are slowing price growth in the private property market, says Ong Teck Hui, national director of research and consultancy at JLL Singapore. He expects any price increase to remain low or flatten out over the next few quarters.
This effect is in line with the government’s intent to achieve a gradual, sustainable price appreciation in the longer term, says Leong Boon Hoe, COO of List Sotherby’s International Realty. But he notes that there is still “sufficient appetite from serious buyers who are likely to be first time buyers or PRs less affected by the cooling measures”. By the end of September this year private home prices have risen 7.9% since the start of the year, and home values are 3.2% lower than the last peak in 3Q2013, says Tricia Song, Colliers International head of research for Singapore.
The landed housing segment was the most resilient in 3Q2018, where the price index rose by 1.7%. Despite prices rising over the past year they are still seen as relatively attractive by many buyers, says Ong.
In the non-landed home segment, the price index in the Core Central Region recorded the highest increase of 1.2%. Price growth in the CCR was led by sales at 8 St. Thomas and Wallich Residences, says Song. The former has sold more than 20 units at a median price of $3,226 psf, while Wallich Residence sold 11 units at a median price of $3,531 psf, according to Colliers’ Song. New Futura and Martin Modern have maintained their median prices from the previous quarter, selling 14 units at $3,558 psf and 28 units at $2,746 psf respectively.
The CCR also saw the least number of new launches compared to the Outside Central Region (OCR) and the Rest of Central Region (RCR). As a result, most prime district buyers had to explore opportunities in the secondary market, which accounts for 76% of CCR transactions during the period. This drove up the median price in the secondary market to $1,919 psf, says JLL’s Ong.
Meanwhile, the resale price index in the OCR increased 0.1%, as “affordable moderate pricing” at new launches contributed to price stability, says Ong. Sales at Affinity at Serangoon picked up as its median prices fell to $1,490 psf. It sold 96 units in 3Q2018 compared to 83 in the previous quarter.
The resale price index for the RCR fell by 0.8%, and was the only index to record a contraction. This contrasts the 5.6% increase in the previous quarter, which suggests that the rate of growth in 2Q2018 was “unsustainable”, says Nicholas Mak, executive director of ZACD Group. Another reason for the decline could be due to selected projects clearing their inventory at a discounted rates, such as The Poiz Residences which sold 16 units at $1,320 psf, says Collier’s Song.
New developments in the area also launched at lower prices, and more new sale projects recorded sales at lower prices, says Ong. The Tre Ver, a new launch in 3Q2018, sold at a lower-than expected price of $1,553 psf. The median prices of new non-landed homes in the RCR fell to $1,706 psf.
The latest cooling measures are likely to continue weighing down buying demand and price growth, and the overall property price index is expected to rise by 6% to 8.5% y-o-y for 2018, says Mak. The pace of new launches and the amount of competing supply in the vicinity will likely dictate developer’s pricing strategy for upcoming new projects, says Collier’s Song.