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Private residential property prices dipped 0.6% in Q1

by • April 2, 2019 • Buying a propertyComments (0)365

The private residential property prices decrease of 0.6%, is steeper than the 0.1% decrease in the previous quarter.

The Urban Redevelopment Authority (URA) released the flash estimate of the price index for private residential property for 1st Quarter 2019 on April 1. Overall, the private residential property index decreased 0.9 point from 149.6 points in 4th Quarter 2018 to 148.7 points in 1st Quarter 2019. This represents a decrease of 0.6%, compared to the 0.1% decrease in the previous quarter.

Prices of non-landed private residential properties decreased by 2.9% in Core Central Region (CCR), compared to the 1.0% decrease in the previous quarter. Prices in the Rest of Central Region (RCR) decreased by 0.2%, after registering an increase of 1.8% in the previous quarter. Prices in Outside Central Region (OCR) were unchanged, following the 0.7% increase in the previous quarter.

The flash estimates are compiled based on transaction prices given in contracts submitted for stamp duty payment and data on units sold by developers up till mid-March. The statistics will be updated on 26 April 2019 when URA releases its full set of real estate statistics for 1st Quarter 2019. Past data have shown that the difference between the quarterly price changes indicated by the flash estimate and the actual price changes could be significant when the change is small. The public is advised to interpret the flash estimates with caution.

Commenting on the private residential property prices, Mr Desmond Sim, CBRE’s Head of Research for Southeast Asia said:

“Based on the preliminary estimates released by the URA for Q1 2019, the private residential property index dropped by -0.6% to 148.7, the second consecutive quarter of decline since Q4 2018. While not yet a trend, this additional data point has reinforced that the cooling measures introduced in July last year have effectively dampened buying sentiments.

Prices have fallen across all segments, with the exception of landed property, where prices have increased by 1.1%. This quarter’s decline was led by the CCR segment, which fell by -2.9%. Prices in the RCR segment fell -0.2%, while those in the OCR segment remained flat. CBRE expects sales at mass market projects to remain resilient as the overall prices of units are still affordable.

Based on the benchmark prices set in the land acquisition spree from 2017 to early 2018, and coupled with the fact that there is still a comfortable timeline of 3-4 years to ABSD, CBRE does not expect developers to reduce prices in the near term. For 2019, we foresee that the residential price index will remain flat; any price decline will likely be due to weakened buying sentiments arising from macroeconomic concerns.”

Commenting on private residential property prices decline for two straight quarters, Ms Tricia Song, Colliers International’s Head of Research for Singapore said:

private residential property prices“Despite two straight quarters of decline in the URA private residential property price index, we think it is too premature to conclude that prices will continue to head south from here on. We note that the launch pipelines could also ease going forward as most of the bulky ones have been launched or being launched.

Colliers Research is maintaining its forecast of a 3% growth in private home prices for the whole of 2019. Supporting factors that could hold up prices in the coming quarters include: halt in interest rate increases, continued benign economic growth, and en bloc beneficiaries buying replacement homes.”

Colliers said that the decrease in Q1 non-landed CCR prices was much steeper than its expectation. Adding that a closer look at the transactions during the quarter suggests that the decline in median prices for certain projects could have contributed to the sharper drop as developers seek to clear inventory in ongoing launches.

Colliers noted that private residential property prices of some earlier launches in the Rest of Central Region may move north in the near future.

“We see some earlier launches such as Margaret Ville and Mayfair Gardens moving more units in Q1 2019 versus Q4 2018 as median prices dropped marginally, while launches that have consistently done well, such as Parc Colonial, Stirling Residences continued to maintain prices.”

It added that private residential property prices fall is not surprising.

“The fall in private home values in Q1 was generally unsurprising amid the weaker market sentiment that carried through from the end of last year, following the implementation of fresh cooling measures in July. With the two straight quarters of price drop, overall private home prices are now 0.7% below the most recent peak in Q3 2018 and 3.8% below the all-time peak in Q3 2013.”

Ms Song said that private residential property prices in the Outside Central Region area continued to be resilient, given the boost in sentiment from the Cross Island Line announcement which helped developers hold onto prices.

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