Pace of decline slows amid property slump

[reporter2]

Pace of decline slows amid property slump

APR 29, 2017

Analysts point to brisk sales and improving sentiment even as private home prices fall for 14th straight quarter

Wong Siew Ying


Prices fell across the private residential, commercial and resale public housing segments in the first quarter, with the losing streak for private homes extending to 14 quarters - the longest slump in 13 years.

But analysts said the slower pace of decline and brisk sales in the first quarter suggest the market could bottom out this year.

Overall private home values dipped by 0.4 per cent from the fourth quarter to the first, led by the landed property segment, data from the Urban Redevelopment Authority showed yesterday.

The price drop was slightly smaller than the 0.5 per cent fall from the third quarter to the fourth.

Said Mr Desmond Sim, head of CBRE Research for Singapore and South-east Asia: "This indicates the trough of the market is at hand."

Private home values had fallen by 11.6 per cent as of March 31 since a peak in the third quarter of 2013, as cooling measures tamed demand.

Sentiment has turned more positive in recent months - owing to the easing of cooling measures last month and an improvement in the economy - drawing buyers back.

Lawyer Ng Wymin, 53, told The Straits Times he is considering buying another apartment, after the purchase of a three-bedder in OUE Twin Peaks last year. The Malaysian said: "I am certain it is the right time now. The market has been down for the last three to four years. There is value in residential properties in Singapore, especially in the city area."

The first quarter saw the highest private home sales in 15 quarters at 5,202 units - including 2,962 new sales but not counting executive condos (ECs), and 2,170 resale transactions. Healthy sales led to unsold inventory of uncompleted private homes hitting a record low of 15,930 units, excluding ECs, as of March 31.

"Barring any sudden deterioration in economic conditions, (sales) volumes are expected to continue to grow as market sentiment remains bullish," said Mr Wong Xian Yang, head of research and consultancy at OrangeTee.

Despite the overall dip in private home prices, there are pockets of recovering segments. Condo prices stayed flat from the fourth quarter to the first - the first time in 14 quarters that the non-landed price index was stable, consultancy JLL said.

In the non-landed private home segment, values rose 0.3 per cent in the city fringe and 0.1 per cent in the suburbs, amid strong demand for new launches. But prices of homes in the core central region fell by 0.4 per cent. New suburban projects included The Clement Canopy in Clementi and Grandeur Park Residences in Tanah Merah. Park Place Residences At PLQ in Paya Lebar helped prop up city-fringe prices.

Landed home prices fell by 1.8 per cent in the first quarter from the last three months of last year, reversing a 0.8 per cent rise from the third quarter to the fourth last year.

"The demand for landed housing is curtailed by the property market curbs and the restrictions on foreigners purchasing this type of real estate," said SLP International Property Consultants executive director Nicholas Mak.

The leasing market stayed weak in the first quarter, as rents of private homes fell by 0.9 per cent, following a 1 per cent dip in the previous quarter. Vacancies improved slightly, falling by 0.3 percentage point from the fourth quarter to 8.1 per cent as of March 31.

In public housing, resale prices fell by 0.5 per cent in the first quarter, the Housing Board said. It was steeper than the 0.1 per cent slide from the third to fourth quarter.

Consultancy Edmund Tie & Company said the decline is "likely a blip", and expects the optimism in the private home market to possibly spill over to the HDB market.

HDB resale transactions also fell by 9.6 per cent from the fourth quarter to 4,530 in the first quarter, due largely to the Chinese New Year lull.

[reporter2]

Q1 private housing data points to a bottoming out

But market watchers are also factoring in the cooling measures still in place, rising interest rates and uncertain job market

April 29, 2017

LYNETTE KHOO


A SLOWER pace of decline in private residential prices in the first quarter continues to affirm the view that a bottoming out is under way - a view reinforced by volumes hitting the highest in 15 quarters and prices of non-landed properties staying flat during the quarter.

Though the private housing market extended its longest losing streak since Q1 2004, the 0.4 per cent drop in private home prices was the smallest dip in the past 14 quarters.

From the peak of Q3 2013, private home prices have fallen by 11.6 per cent.

Non-landed home prices remained unchanged in the first quarter, after a 0.8 per cent fall in the preceding quarter, data from the Urban Redevelopment Authority (URA) on Friday showed.

The number of private homes transacted in the first quarter stood at 5,202 units; this was the highest level in 15 quarters, a 83 per cent jump from a year ago and 19 per cent more than the quarter before.

Though prices have not yet reached a trough, these are reasons enough for JLL national director of research and consultancy Ong Teck Hui to conclude that the private residential market is "on its firmest footing since mid-2013".

OrangeTee head of research and consultancy Wong Xian Yang said the market could bottom out earlier than expected towards the end of this year. He cited the following as factors: stronger-than-expected developers' sales, rising land costs, dwindling levels of unsold inventories, consistently rising resale volumes and surprisingly resilient occupancy rates.

"However, market recovery is expected to be U-shaped, due to the current cooling measures and global economic uncertainty," he added.

PropNex Realty chief executive Ismail Gafoor noted that buyers and investors who have been waiting on the sidelines have shown greater urgency in picking up units in recent launches, in anticipation of prices going up in the coming quarters following the slight adjustments to cooling measures in March.

Developers sold 2,962 units in the first quarter, up from 2,316 units a quarter ago.

Resale volumes grew to 2,170 from 1,944 units.

In the executive condominium (EC) market, 1,072 units were sold by developers in the first quarter, up from 734 units in the preceding quarter.

But market watchers are not discounting the patches of market weakness yet.

The existing cooling measures, which many perceive to have a lower chance of being unwound for now, are still weighing on the market.

And then there are also rising interest rates and uncertainty in the jobs market to contend with, said SLP International executive director Nicholas Mak.

"For the rest of this year, the private housing price indices are expected to continue to decline at a slow pace," he said.

With fewer new condominium projects expected to be launched in the second half of this year, the catalysts for property prices would not be as strong for the rest of this year, he added.

Strong buying demand for popular launches in the city-fringe and suburban regions during the quarter - including that for Park Place Residences in the Rest of Central Region (RCR) and The Clement Canopy and Grandeur Park Residences in the Outside Central Region (OCR) - could have propped up prices in those regions, analysts suggested.

URA price indices for non-landed RCR and OCR marked a 0.3 per cent and 0.1 per cent rise in the first quarter respectively. RCR and OCR had declined 2 per cent and 0.6 per cent in the fourth quarter.

But prices in the prime area or Core Central Region (CCR) were down 0.4 per cent, after having risen 0.1 per cent in the previous quarter.

New sales made up 59 per cent and 66 per cent of total sales in the RCR and OCR respectively. Resales in the CCR accounted for 82 per cent of the region's total transactions.

Meanwhile, the landed segment continues to lag the broader market recovery. Its steep 1.8 per cent price fall lent weight to earlier views that the 0.8 per cent rise the quarter before was a technical rebound.

Mr Mak said: "The fundamentals in the landed housing market have not changed. The buying demand for landed housing is curtailed by the property market curbs and the restrictions on foreigners to purchase this type of real estate."

While vacancy rates for private homes eased slightly by 0.3 percentage points to 8.1 per cent in the first quarter, the rental market malaise is likely to persist. The OCR, where a majority of completions this year are located, is expected by analysts to be the hardest hit.

In the first quarter, overall rents of private homes slipped 0.9 per cent in a 14th straight quarter of decline, after a one per cent drop in the previous quarter.

Mr Mak called the quarterly 0.4 per cent rise in rents in the OCR in the first quarter a statistical blip, noting that it does not signal the start of a rental recovery in that region.

Based on OrangeTee's estimates, the overall gross rental yields of properties in the OCR fell to 3.3 per cent last year, from 3.9 per cent in 2012. Last year's gross rental yields in the Core Central Region (CCR) and Rest of Central Region (RCR) were at 2.9 per cent and 3.2 per cent respectively.

In the public housing market, HDB resale prices slipped 0.5 per cent in the first quarter as transactions fell 9.6 per cent quarter on quarter to 4,530 in a seasonally slow period.

The number of applications approved for subletting of HDB flats fell by 6.5 per cent from a quarter ago to 9,981 cases.

Edmund Tie & Company head of South-east Asia research Lee Nai Jia said the dip in HDB resale prices could be a blip as the increase in government grants should boost demand for public housing.

"Notwithstanding, it is still premature to conclude that an upturn is around the corner for prices of HDB flats, especially after National Development Minister Lawrence Wong's caution over the purchase of homes with an expiring lease," he said.