Q3 numbers hint at cooling of property fever

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Published October 23, 2010

Q3 numbers hint at cooling of property fever

Private home prices up just 2.9 per cent in Q3 from Q2's 5.3 per cent; number of new home sales and HDB resale transactions also fall

By UMA SHANKARI

(Singapore)


PRIVATE home prices in Singapore rose just 2.9 per cent in the third quarter - slightly lower than the previous estimate of 3.1 per cent in early October - as the impact of new cooling measures were felt. Private home prices climbed 5.3 per cent in Q2.

The number of new homes sold by developers also fell in Q3, together with the number of resale and sub-sale transactions, data released by the the Urban Redevelopment Authority (URA) yesterday showed.

The slowdown was also noticeable in the public housing market. The number of the Housing & Development Board (HDB) resale transactions fell by about 10 per cent quarter-on-quarter, from 9,114 cases in Q2 this year to 8,205 cases in Q3. This was largely due to the 25 per cent drop in monthly resale volume from August to September - after the cooling measures were introduced on Aug 30.

HDB resale prices, however, continued to grow at a steady clip. HDB's resale price index rose by 4 per cent in Q3 - slightly lower than the 4.1 per cent recorded in the second quarter but still higher than the 2.8 per cent growth seen in Q1 this year.

HDB resale prices kept climbing as cash-over-valuation (COV) levels continued to inch upwards.

PropNex chief executive Mohamed Ismail pointed out that while the overall median COV remained at $30,000 in Q3, a closer examination of the figures revealed that median COVs for individual flat types rose by about $2,000 to $3,000 across three-room, four-room, five-room and executive flats in Q3 as compared to Q2.

However, Mr Ismail cautioned that market watchers should not conclude that the government's cooling measures had not worked as HDB's Q3 data is largely based on July and August figures.

Echoed Eugene Lim, associate director of ERA Asia-Pacific: 'HDB's resale price index show that resale prices continued increase by 4 per cent in Q3 because most of the transactions were submitted before the Aug 30 announcement of property measures. As such, the impact of these measures on resale prices would probably be reflected in the Q4 numbers.'

But in the private housing market, the slowdown was already apparent in the Q3 data.

The 2.9 per cent gain in private home prices in Q3 is much slower than the gains of 5.3 per cent in Q2 and 5.6 per cent in Q1 this year.

URA's data showed that prices rose more slowly across all regions of Singapore. Non-landed home prices in Core Central Region (which includes the prime districts, Marina Bay and Sentosa Cove) climbed 1.6 per cent in Q3, lower than the 5.4 per cent per cent growth in Q2.

Likewise, the price index for Rest of Central Region rose by 2.3 per cent in Q3, down from 4.6 per cent in Q2. And in the Outside Central Region (where suburban condos are located), prices climbed 2.2 per cent in Q3 after increasing 5.7 per cent in Q2.

In addition to the slowing price growth, the number of property transactions also dipped.

Developers sold 3,638 new homes in Q3 this year, down from 4,033 in Q2 and 4,380 in Q1.

The momentum of sales in the secondary market also slowed down in tandem with the primary market.

A total of 4,172 resale transactions were registered in Q3, 20 per cent lower than the 5,233 transactions in the previous quarter. Sub-sales numbered 703, also 20 per cent lower than the 880 deals done in the second quarter.

CBRE Research executive director Li Hiaw Ho noted that the 703 sub-sales represent 8.3 per cent of the total sales volume in the third quarter of this year.

'This is the third consecutive quarter where sub-sales made up less than 10 per cent of total sales, showing that the government measures have effectively capped speculative activity to a more acceptable level,' Mr Li said.

Rents of private residential properties rose 3.6 per cent in the third quarter, lower than the 5.9 per cent increase in the April-June period.

But Ong Teck Hui, Credo Real Estate's executive director of research and consultancy, noted that one sector of the private residential market - landed homes - was still buoyant.

While the rate of price increase for non-landed homes slowed from 5 per cent in Q2 this year to 1.6 per cent in Q3, landed home price growth rose from 6.2 per cent in Q2 to 7.7 per cent in Q3.

'The trend of landed prices increasing more rapidly is due to strong demand for landed homes while supply remains limited,' Mr Ong said. 'Buyers of landed homes also have higher affordability and are therefore better able to cope with price increases.'

Looking ahead, analysts expect sentiment in the private residential property market to remain subdued over the last three months of the year as the latest round of cooling measures continue their work.

Developers' sales of new units are expected to fall further to just 1,500-3,000 units in Q4 while the island-wide residential price index is forecast to increase by at most 2 per cent in the final quarter of the year.

And in the HDB market, the number of resale transactions is expected to dip by another 20 per cent in Q4 from Q3, analysts said. They also expect HDB resale price growth of just 0-2 per cent over the fourth quarter. In fact, resale prices may even adjust downwards by 5-8 per cent over the next six months, said ERA's Mr Lim.

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Oct 23, 2010

Private home prices to stay fairly flat


TWO months after the introduction of property market cooling measures, consultants are sure of one thing - Singapore private home prices are likely to be fairly flat until the end of the year.

The chief executive of consultancy PropNex, Mr Mohamed Ismail, expects the Urban Redevelopment Authority's price index to reach a plateau in the current fourth quarter, with another 2 per cent growth at most.

'(This is) simply because buyers are not coming in big numbers,' Mr Ismail told The Straits Times.

He said August's market cooling measures had weakened demand for mass market homes.

Buyers were becoming more price-sensitive, partially owing to tighter lending rules, he added.

Buyers are also carefully considering purchases given the restrictions on dual ownership, said director of research and advisory at Colliers International, Ms Tay Huey Ying.

'Buyers are really standing on the sidelines and watching,' Ms Tay said.

Another consultancy, Colliers, also expects the price index to increase by 2 per cent, at most, in the current quarter.

Consultants have differing views on the outlook for the popular mass market segment.

Mr Ismail expects prices of these homes to fall 5 per cent to 10 per cent in the first half of next year as developers respond to price-sensitive buyers.

However, Mr Ong Kah Seng, senior manager for Asia-Pacific research at Cushman & Wakefield, believes that prices are likely to remain flat.

'Buying interest will improve,' said Mr Ong, as buyers adjust to the measures by next year. However, better sentiment laced with some caution is likely to keep prices muted, he said.

Experts agree though that prices of high-end condominiums and landed properties will continue to rise, albeit at a slower pace.

High-end residential prices will rise 2 per cent to 3 per cent per quarter in the first half of next year, they believe.

HARSHA JETHNANI