Condos near MRT stations in mature towns help capital preservation

By Sims Urban Oasis / Brought to you by GuocoLand | October 21, 2016 7:08 PM SGT
Based on URA’s flash estimates for 3Q2016, prices for private homes in Singapore have fallen 11% from the recent peak in 3Q2013 to 3Q2016. The pace of decline has accelerated in 3Q2016 as evidenced by the 1.5% fall in prices compared with the 0.4% dip in 2Q2016. All three market segments saw price declines in 3Q2016, with a 1.8% fall in Core Central Region (CCR) versus a 0.3% increase in 2Q2016; a 1.3% fall in Rest of Central Region (RCR) versus a 0.2% uptick in the previous quarter; and a 1.2% decline in Outside Central Region (OCR) versus a 0.5% dip in 2Q2016.
Against the backdrop of a market downturn, investors looking for defensive assets might consider properties in areas that have shown resilience in past down cycles. The Edge Property conducted a study onthis and found the Geylang planning area to be among the top 10 most resilient planning areas over the past three down cycles and the current downturn, which started in 3Q2013. Other planning areas of interest are Bukit Timah, Clementi and Hougang, which have been among the most resilient in three downturns, and Ang Mo Kio, Bedok, Jurong East, Marine Parade, River Valley and Serangoon, which have been resilient in two downturns. It would come as no surprise to seasoned investors that these planning areas are all mature estates that have well-developed facilities and amenities (see table).
Top 10 most resilient planning areas in each property down cycle

Source: URA, The Edge Property

The price resilience was determined by comparing the change in median psf resale price of transactions for private non-landed homes in each planning area from the price peak to the trough in each down cycle. Only planning areas with at least 10 resale transactions for private non-landed homes in each reference quarter were included in the comparison.
The study by The Edge Property further analysed the price performance of homes near the 26 MRT stations in these resilient planning areas by matching resale transactions from URA caveat data and comparing the purchase and...