Private home prices rose 0.5% in 3Q2017 after 15 quarters of decline

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October 2, 2017 11:56 AM SGT
Updated, Oct 5, 2017, 12:49 p.m., to reflect changes as shown in print edition of the article in EdgeProp Pullout, Issue 800 (Oct 9, 2017)
Based on flash estimates released by URA on Oct 2, the private residential property index rose by 0.7 point to 137.3 points in 3Q2017, from 136.6 points in 2Q2017. This translates into a 0.5% q-o-q increase, compared with a 0.1% decline in 2Q2017.
This marks the end of a price decline for 15 straight quarters since 4Q2013. For Lee Nai Jia, head of research at Edmund Tie & Company (ET&Co), the overall increase in the private residential price index for 3Q2017 was anticipated. “This can be attributed to an improvement in consumer sentiment, higher sales, the hike in collective sales and the low interest rate environment,” says Lee.
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With regards to the sustainability of the turnaround in prices, ET&Co’s Lee comments, “The improvement is unlikely to be a flash in the pan, as private residential sales have been building up for some time.”
Source: Qingjian Realty
Prices of non-landed private residential properties in the OCR rose by 0.7%, driven in part by the strong sales at Le Quest’s launch on Aug 5
Eli Lee, senior investment analyst at OCBC Investment Research, concurs. “The market moves in cycles, so turning points are extremely significant. Like a tanker on the ocean, it is difficult to reverse course, but when it does, it stays on the new path for some time,” says Lee.
While the consensus is that the bottom of the property market is not far ahead, OCBC’s Lee is of the view that the trough is in fact behind us, with home prices likely to have hit their cyclical lows in mid-June.
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However, Desmond Sim, head of CBRE Research, Singapore and Southeast Asia, suggests caution. “It is still too early to call for a rebound as we need more than one data point,” Sim comments. “The government will now be monitoring the price performance closely, but the impending rise in interest rates will be a major factor to consider when buyers decide on a purchase.” Sim expects “a near definite increase” in the index over the next half-year, driven predominantly by higher land prices rather than a demand- supply mismatch.
The sentiments among analysts, however, is generally positive. They anticipate that the overall index will increase between 3% and 8% in 2018, if nothing changes.
Most segments saw a q-o-q increase in private residential property prices in 3Q2017, save for the Rest of Central Region, where prices remained unchanged.
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Landed property prices, the top performer among all segments in 3Q2017, increased by 1% q-o-q, compared with a 0.3% decline in 2Q2017. “Landed homes in choice locations are in high demand and are quickly snapped up,” says ET&Co’s Lee.
Prices of non-landed private residential properties in the Core Central Region and the Outside Central Region (OCR) rose 0.2% and 0.7%, respectively, after registering a 0.5% and 0.3% decline in 2Q2017. “The improvement in prices coincided with the higher take-up rate of recent launches such as Martin Modern and Le Quest,” says ET&Co’s Lee.
Martin Modern and Le Quest saw strong sales on their launch weekends in July and August. According to GuocoLand, close to 90 units were sold for the first phase of Martin Modern over the launch weekend of July 22 and 23. Unit prices ranged from $1.75 million to $4.55 million ($2,009 psf to more than $2,500 psf).
Meanwhile, Qingjian Realty (South Pacific) sold 280 units on the first day of Le Quest’s launch — on Aug 5 — at an average price of $1,280 psf. This means the 516-unit Le Quest was 54.3% sold after just one day.
This article appeared in EdgeProp Pullout, Issue 800 (Oct 9, 2017)