Have high-end home prices bottomed?

By Feily Sofian / The Edge Property | April 12, 2016 6:14 PM SGT
On April 1, the Urban Redevelopment Authority (URA) released its flash estimate of the private residential price index for 1Q2016. While the overall price index fell 0.7% q-o-q, prices of non-landed homes in the high-end segment or Core Central Region (CCR) bucked the trend, notching up 0.4%. Market watchers attributed the uptick to the strong sales at Cairnhill Nine. There have been 182 caveats lodged since the project was launched on March 12. Of these, 85% were for one- and two-bedroom units, which could have boosted the price index.
Stripping new sales, high-end resale prices could have bottomed and stabilised. But it is still too early to tell whether there will soon be a sustainable rebound in prices given the weak macro-economic indicators. There could still be transactions at exceptionally low prices that float up now and then, although they are a minority.
Due to the scarce number of transactions in the high-end segment, there is no one sure-fire method to establish the price change over two periods. However, we can draw inferences from various sources.
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Knight Frank’s quarterly report shows the average resale prices for high-end homes rising 3.8% q-o-q in 4Q2015, marking the second consecutive quarter of increase. Its 1Q2016 data will be released in the coming weeks.
DTZ, meanwhile, is of the view that prices are still trending down, albeit modestly. According to the firm, resale prices of high-end homes were down 1% q-o-q in 1Q2016. However, this represents only around $20 psf decline, which is mild, says Lee Nai Jia, its Southeast Asia head of research.
NUS' Singapore Residential Price Index for resale non-landed homes in the Central Region were also up 0.5% m-o-m in February. This follows a 0.6% m-o-m declines in December and January respectively.
Separately, our analysis of 22 properties in the CCR indicates that prices were flattish, slipping by a marginal 0.2% between 4Q2015 and 1Q2016. The 22 properties were selected as there were transactions involving similar units in 4Q2015 and 1Q2016. The objective is to track the price change for the exact same units over two periods.
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Prices increased in 12 out of the 22 properties. In Goodwood Residence, for example, a 1,970 sq ft unit on the 10th floor was transacted at $2,538 psf in October 2015. Meanwhile, a unit directly below it with similar size and facing, was sold for $2,570 psf in January, which indicates a 2% price gain between 4Q2015 and 1Q2016 after adjusting for floor level.
However, prices declined for 10 out of the 22 properties. At Vida, for example, a 861 sq ft unit on the 10th floor fetched $1,904 psf in November while a unit of five levels above it with similar size and facing was sold for $1,893 psf. After adjusting for floor level, the two transactions indicate a 3% price decline between 4Q2015 and 1Q2016.
While the price change varied among the 22 properties, there appears to be sellers’ resistance against more discounts and at the same time, buyers are more willing to bite.
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DTZ's Lee also commented that most of the price declines in the firm's basket of properties were confined to less desirable units. On the other hand, prices for premium units, such as those with superior views, are holding firm.
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The pick-up in resale volume preceded the stabilising prices. Based on URA statistics, there were 278 resale caveats for private non-landed homes in the CCR in 1Q2016, up slightly from 235 in the same period last year. Singaporean purchasers accounted for nearly three-quarter of these transactions. Last year, the number of resale caveats in the CCR rose 36% over 2014.
Homes in CCR have led the rebound in resale volume. Last year, the number of resale caveats in CCR rose 36% over 2014. In comparison, they increased 26% in Rest of Central Region and 21% in Outside Central Region.
Forty per cent of the CCR resale caveats in 1Q2016 were for properties in the $1 million-to-$2 million price range. The units were mainly located at The Sail @ Marina Bay, Amaryllis Ville, Cube 8, D’Leedon, Icon, Kim Sia Court, RV Residences and Valley Park. Properties in the $2 million-to-$3 million price range accounted for another 28% of resale caveats in 1Q2016.
There were 33 resale caveats lodged for units above $5 million in 1Q2016, on a par with 1Q2015’s 31 caveats (see Chart). Singaporean purchasers accounted for more than half of these caveats.
In fact, 10 of the 33 caveats in 1Q2016 were above $10 million. In comparison, only 15 resale caveats were above $10 million for the whole of 2015. These caveats were from units in Bishopsgate Residences, Boulevard Vue, Seven Palms Sentosa Cove, St Regis Residences Singapore, TwentyOne Angullia Park, The Ritz-Carlton Residences Singapore Cairnhill and Urban Resort Condominium. The most expensive transaction in 1Q2016 was that of a 4,478 sq ft unit at Boulevard Vue, which fetched $15.9 million, or $3,550 psf.
This article appeared in The Edge Property Pullout, Issue 724 (April 18, 2016) of The Edge Singapore.