June resale prices up 0.2%, volumes down 25.5 %

June is the usual low season because of the school holidays; World Cup a possible factor, says one analyst

Wed, Jul 11, 2018

Yunita Ong

RESALE prices of non-landed homes in June crept up just 0.2 per cent from the previous month as volumes plunged 25.5 per cent, going by the latest flash estimates by real estate portal SRX Property.

Compared to May, the Core Central region (CCR) and Outside Central Region (OCR) recorded a price increase of 0.1 per cent and 0.4 per cent respectively, while Rest of Central Region (RCR) prices remained unchanged.

Year-on-year, prices in June 2018 increased by 10.6 per cent from June 2017. CCR, RCR and OCR recorded a year-on-year price increase of 10.9 per cent, 11.6 per cent, and 9.4 per cent respectively from 2017.

Based on an index average of three months in Q2 2018 and that of the preceding quarter, prices have risen 3.8 per cent from Q1 2018.

SRX also revised its monthly price change figure for May up slightly to 1.3 per cent, from 1.2 per cent.

June's resale volume declined 25.5 per cent to 1,128 units from May's 1,514 units.

Year on year, the number of units resold rose 4.6 per cent from June 2017, but resale volume was down by 45.0 per cent compared to the peak of 2,050 units in April 2010.

Overall median Transaction Over X-Value (TOX) was positive S$17,000 in June 2018, a decrease of S$1,000 from positive S$18,000 TOX for May.

TOX measures how much a buyer is overpaying or underpaying on a property based on SRX Property's computer-generated market value.

District 21's Upper Bukit Timah and Ulu Pandan posted the highest TOX among districts with more than 10 resale transactions, of positive S$70,000. This suggests that a majority of the buyers there bought units above the computer-generated market value.

District 26's Upper Thomson and Springleaf posted the most negative median TOX at S$12,000 among relatively active districts, suggesting that a majority of the buyers there bought units below the computer-generated market value.

Christine Sun, the head of research and consultancy at OrangeTee & Tie, said a possible reason for the fall in resale volume in June lies in the many new projects launched that month.

"Some potential buyers could have diverted their attention to the new-sale market instead; some could have also waited on the sidelines as they know new projects will be launched soon," she said.

"Moreover, June is usually a lull period for home purchases because of the school holidays. The World Cup may also have some limited impact on buying sentiment."

Nicholas Mak, the executive director for ZACD Group, said resale volumes could fall in July and August if volume is based on the date of the issue of the option to purchase. But there will be no spike in resale volume on the evening of the government announcement as resale buyers may not have had time to react to the surprise news of the cooling measures on the evening of July 5, he said.

"In the next few months, there is likely to be a mismatch between the expected prices of buyers and sellers, which will result in declining transaction volume," he said. "It could take about six to 12 months from now for resale volume to gradually recover."

Dr Lee Nai Jia, senior director and head of research at Knight Frank Singapore said: "With the recent cooling measures, the resale volume may slide further in July and August, as buyers and sellers take time to rationalise the measures. Resale prices are likely to ease, as the residential market shifts from a seller's market to a buyer's market."