Private property price index up 0.3% in 4Q2019; projected to rise 2.5% for the full year

/ EdgeProp Singapore |

January 2, 2020 11:56 PM SGT

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SINGAPORE (EDGEPROP) - The flash estimate for 4Q2019 released by the URA showed a slower pace of growth in the overall private residential property price index: 0.3% q-o-q in 4Q2019 compared to 1.3% in 3Q2019.

The launch momentum in the CCR picked up in 4Q2019 with six new projects placed on the market (Photo: Samuel Isaac Chua/EdgeProp Singapore)

The rise in the index in 4Q2019 was mainly driven by prices of non-landed housing (apartments and condominiums) in the suburbs or Outside Central Region (OCR) which increased by 2.9% q-o-q; and landed residential property prices, which saw a 4% spike.

See table below:

	3Q2019	4Q2019 (flash estimates)
Overall	1.3%	0.3%
Non-landed	1.3%	-0.7%
Core Central Region (CCR)	2.0%	-3.7%
Rest of Central Region (RCR)	1.3%	-1.4%
Outside Central Region (OCR)	0.8%	2.9%
Landed	1.0%	4.0%

Source: URA Realis/JLL Research

The overall non-landed (apartment and condominium) property price index fell 0.7% q-o-q, dragged down mainly by a 3.7% drop in the prime or Core Central Region (CCR) and a 1.4% decline in the city-fringe or Rest of Central Region (RCR) prices.

Positive price momentum in OCR

The OCR price index in 4Q2019 was lifted by three major new project launches, notes Tricia Song, Colliers International head of research for Singapore. They are: Sengkang Grand Residences, which sold 235 units (median price of $1,741 psf); Dairy Farm Residences, which sold 36 units (median price of $1,553 psf); and Midwood, with 22 units sold (median price of $1,646 psf).

Meanwhile, earlier project launches such as Treasure at Tampines and Florence Residences continued their progressive take-up. In 4Q2019, Treasure at Tampines saw 156 units sold (median price of $1,376 psf) compared with 275 units (median price: $1,342 psf) in 3Q2019. Florence Residences sold 53 units (median price: $1,508 psf), compared with 293 units (median price: $1,447 psf) in 3Q2019.

RCR declines from ‘high base’ in 3Q2019

The decline in the price index for RCR in 4Q2019 could be due to the “high base” achieved in new project launches in the previous quarter (3Q2019), such as Avenue South Residences, One Pearl Bank and Meyer Mansion, notes Colliers’ Song. In 4Q2019, there were no new project launches in the RCR. Only 849 units from earlier project launches in the RCR were sold during the quarter, almost half the 1,502 units in 3Q2019.

The absence of new launches in 4Q2019, coupled with a significant drop in transactions above $2,000 psf during the quarter, led to a 1.4% slide in the price index for the RCR, adds Ong Teck Hui, JLL senior director of research & consultancy.

CCR demand in 4Q2019 ‘diluted’ by year-end holiday

The launch momentum in the CCR picked up in 4Q2019 with six new projects placed on the market, namely Midtown Bay at Guoco Midtown, Neu at Novena, Royalgreen in the Bukit Timah area, Pullman Residences Newton on Dunearn Road, The Ivera in the River Valley area and One Holland Village Residences in Holland Village. With the year-end holiday kicking in, “demand could have been diluted”, observes JLL.

The number of unsold units in launched projects in the CCR has increased more than four-fold – from 177 units in 3Q2018 to 825 units in 3Q2019, according to URA statistics. “With increased choices for buyers and in the absence of price-leading projects coming on the market, CCR prices could have faced greater pressure,” notes JLL’s Ong.

Prices in the CCR may have declined 3.7% in 4Q2019, after rising for two consecutive quarters in 2Q2019 (2%) and 3Q2019 (2.3%). CCR prices are now 3.6% below its recent peak in 3Q2018, and 5.9% below its all-time high in 1Q2013, notes Colliers.

The volume of transactions for landed homes has remained stable between 2Q2019 and 4Q2019, says JLL’s Ong, “reflecting firm demand, which could have contributed to the 4% rise in the landed index”. The landed property price index in 4Q2019, however, is still 3.6% below that of the peak in 3Q2013.

Gradual rise in overall prices

The overall private residential price index is gradually rising and is only 0.8% lower than the previous peak in 3Q2013, says Nicholas Mak, head of research & consultancy for ERA Realty Network.

The full-year price increase for 2019 is likely to be 2.5%, according to Christine Li, Cushman & Wakefield head of research for Singapore and Southeast Asia. This is lower than the 7.9% increase in 2018.

According to advanced estimates from the Ministry of Trade and Industry (MTI) today, Singapore’s GDP grew 0.8% in 4Q2019, bringing the full-year GDP growth to 0.7%, the lowest annual growth in a decade – growth was 0.2% in 2009.

However, Oxford Economics expects the economy to do better in 2020, potentially growing 1.4%, says Colliers’ Song. As home prices are “highly correlated” to household income and the economy, she expects private residential prices to grow by 3% in 2020.

Song is also projecting a take-up rate of 9,800 in developers’ new home sales in 2020, which is similar to the level in 2019. “The demand for Singapore private homes is still relatively stable given the tight labour market, favourable interest rate environment, and relatively healthy household balance sheet,” she adds.

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