Longest losing streak of home price declines in Singapore

Residential properties in Singapore suffered its 10th consecutive quarterly decline in prices as shown in the latest flash estimates by the Urban Redevelopment Authority (URA). The overall quarterly private residential property price index declined by 0.7% in 1Q2016 ending March 31, 2016 compared to a 0.5% decline in the final quarter of 2015. Overall, from its peaks in 2013, residential property prices have declined by almost 9%. The successive rounds of residential property price declines are expected to continue given that the Finance Minister, Heng Swee Kiat has ruled out any removal of property cooling measures as per the Budget 2016 statement he made in Parliament on March 24.

Breaking down the figures

Urban Redevelopment Authority (URA)

Urban Redevelopment Authority (URA)

Looking at a regional basis, the core central region (CCR) comprising of the traditional prime districts of 9, 10, and 11, along with Downtown Core and Sentosa Island showed property prices in that area rose by 0.4% on a quarterly basis, compared with the 0.3% decline in 4Q2015. The CCR region was the only area that offers some respite from the successive home price declines islandwide, and could act as a major confidence booster to the overall housing market if positive price trends are exhibited in the future months and quarters in 2016. However, such positive price trends might be short lived if global slowdown, stock market volatilities, and geopolitical tensions continue to deteriorate.

Some possible explanations for the CCR home price rise include the rise of geopolitical tensions which draw foreign investors away from their home countries and into Singapore as a safe haven. A second reason could be the expectations of the Singapore government loosening its grip on the property cooling measures this year, including the 15% additional buyer stamp duty (ABSD) levied on foreign property purchases. Despite those expectations seemed farfetched given the latest Budget 2016 announcements, foreigners are still not deterred from buying high-end properties as shown in the recent buoyant weekend launch sales of CapitaLand Limited’s Cairnhill Nine mixed-use project where 134 out of the 200 units launched on March 12 – 13 were sold out. Among the buyers during that launch weekend, 50% of them were comprised of foreigners.

The robust sales performance at Cairnhill Nine was also picked up by Desmond Sim, head of research at CBRE where he pointed out that blip in overall CCR prices could be due to sales in Cairnhill Nine as a majority of the units are one- and two-bedroom units. However, Sim cautions that it is still early to tell whether prices of high-end homes have bottomed, although they seemed to have stabilised.

Other reported transactions in the CCR area during 1Q2016 include the completely sold out Urban Resort Condominium development nearby where its developer, CapitaLand sold the last two penthouse units, and Far East Organization’s Boulevard Vue located opposite of Wheelock Place shopping mall which saw sales of its top floor units to the owner of Denmark’s Pandora Jewellery, and an individual believed to be an Indonesian.

In other regions, non-landed private residential prices in the Rest of Central Region (RCR) declined by 0.4% in 1Q2016 which is unchanged from 4Q2015, followed by Outside Central Region (OCR) where prices declined by 0.9% in 1Q2016 compared to no change in 4Q2015.

CBRE’s Sim pointed out that while the RCR registered a worst that expected double digit decline of 10.2% from the peak in 2Q2013 as measured on a quarterly basis, prices in the CCR and OCR are steadily moving towards double digit falls from the previous peak as well

Nicholas Mak, head of research SLP International expects overall residential property prices continue to slide due to government’s inaction to lift some of the property cooling measures. Mak’s estimate for property prices in FY2016 to decline from 2% to 5%.

 

About Hock Meng Tay - Chief Editor, Asia-Pacific Region

Hock Meng Tay, CAIA has written 181 post in this blog.

Chief Editor, Asia-Pacific Region Hock Meng Tay is a CAIA holder and is currently taking CFA qualification. He has over 10 years of experience working as research associate in several investment companies.He is an expert in financial analysis and has published research reports in his current role. He obtained his Masters of Business Administration in Integrated Management and Masters of Arts in Economics while serving his internship in Starsource Inc

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About Hock Meng Tay - Chief Editor, Asia-Pacific Region

Chief Editor, Asia-Pacific Region Hock Meng Tay is a CAIA holder and is currently taking CFA qualification. He has over 10 years of experience working as research associate in several investment companies.He is an expert in financial analysis and has published research reports in his current role. He obtained his Masters of Business Administration in Integrated Management and Masters of Arts in Economics while serving his internship in Starsource Inc

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