Private property price index down 1.2% in 1Q2020

By Valerie Kor
/ EdgeProp Singapore |
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SINGAPORE (EDGEPROP) - The flash estimate for 1Q2020 released by the URA showed a decline in the overall private residential property price index: a decrease of 1.2% compared to an increase of 0.5% in the previous quarter.
This is the biggest drop in the last seven quarters since the previous round of cooling measures in July 2018.
The decrease correlates to the global economic slowdown caused by Covid-19, which has caused entire sectors to come to a standstill.
PropNex Realty CEO Ismail Gafoor notes a triple whammy: “Three key factors are caused by the Covid-19 situation: first, a lack of foreigner buyers as a result of restrictions in entering the country; second, Singaporean buyers are more cautious, as they are concerned about their job security; third, developers are adapting to attractive pricing with low profit margin, which have led to lower prices.”
It is not just the developers who are lowering the profit margins. Lee Sze Teck, director of research at Huttons Asia, also shares that sellers are lowering margins as well to offload their properties — especially those who own completed homes in the mass market and landed property segment. This further pushes the price index downwards.

Price and transaction volume forecast

According to the caveats lodged with the URA, total transaction volume of private homes in 1Q2020 is approximately 22% lower than in 4Q2019.
Based on caveats downloaded on April 1, developers sold 528 new homes (excluding executive condominiums or ECs) in March 2020, down sharply from 947 units in February. Secondary transactions were also down, at 328 units in March, from 436 units in February.
“We now expect that developers’ sales may fall to 8,000 units for the full 2020, compared to the 9,912 units in 2019,” says Tricia Song, head of research at Colliers International.
Private Property Price Index (All Residential)
Core Central Region (%)
Rest of Central Region (%)
Outside Central Region (%)
2018 Overall
2019 Overall
Q12020 (Flash)
Source: PropNex Research, URA
According to Ong Teck Hui, senior director of research & consultancy at JLL, several new projects were launched in the Core Central Region (CCR) in the first quarter of the year. Those that did well offered competitive prices, which also worked to lower the index. He says: “While several new projects were launched in CCR in 1Q2020, they garnered rather thin sales, except for The M, which sold 389 units at a median price of $2,439 psf. The less aggressive pricing at The M compared to new sale transactions in 4Q2019 contributed to an easing index for non-landed homes in 1Q2020.”
Another project that sold at perceived discounts is The Enclave at Holland, a 26-project launched since July 2018. It sold 14 units in the first quarter at a median price of $1,851 psf, compared to previous units sold at $2,500 to $2,600 psf.
Note: SPR represents Singapore permanent residents; NPR represents foreigners without permanent residence status.
Source: URA, ERA Research and Consultancy
The lack of foreign buyers is likely to have caused a significant drop in prices in the CCR, according to Nicholas Mak, head of research and consultancy at ERA Realty.
This is also coupled by a high inventory of project launches for sale in the CCR, says CBRE’s head of research, Desmond Sim. As a result, CBRE Research believes that the residential property price index could correct by 5% to 8% in 2020 amid slower economic growth.
“The demand in the prime residential property market depends on foreign buyers more than the rest of the property market. Based on preliminary numbers for 1Q2020, the number of private residential units purchased by foreign buyers (including permanent residents and foreigners without permanent residence status) in Singapore fell by 25% from 4Q2019 to 1Q2020,” he adds.
In the Rest of Central Region (RCR), JLL’s Ong notes that there were no major new launches in the first quarter to lead prices, which caused prices to soften from 4Q2019 to 1Q2020. Most of the sales still came from previously launched projects such as Parc Esta, which sold 154 units at median price of $1,680 psf, and Jadescape, which sold 164 units at median price of $1,707 psf.
treasure at tampines - Treasure at Tampines was one of the developments in the OCR that sold below the median price of $1,600 psf (Photo: Samuel Isaac Chua/EdgeProp Singapore)
Treasure at Tampines was one of the developments in the OCR that sold below the median price of $1,600 psf (Photo: Samuel Isaac Chua/EdgeProp Singapore)
This is similar in the Outside Central Region (OCR), which also did not have any major new launch in 1Q2020. Treasure at Tampines, Parc Clematis and Parc Botannia, which sold below the median price of $1,600 psf, dominated sales and may have caused the index for non-landed homes in the OCR to decline by 1%.
Overall, research consultants are not expecting dramatic price corrections or steep declines due to past cooling measures. Homeowners are unlikely to default on housing loans or panic-sell due to governmental support and developers are unlikely to adjust prices drastically, given that their balance sheets are still healthy.
Wong Xian Yang, senior manager at Cushman & Wakefield, says: “For now, fire sales are not expected, as unemployment rates remain relatively low and most property owners are not under huge pressure to sell. Furthermore, the majority of property sales over the last few years have been driven by local owner-occupiers and investors, the majority of which are holding for the long term.”
“If prices show signs of spiralling downwards, the government can potentially ease cooling measures to stimulate demand. As such, we may not see a sharp drop in prices like in previous recessions,” he adds.
One of the silver linings of the current slowdown is lower interest rates as a result of federal interest rate cuts. Gafoor says: “Genuine buyers taking advantage of the lower interest rates picking up rightly priced projects. However, with the current market sentiment, we are expecting property prices to drop in the range of 2% to 3% this year.”
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