2nd July Singapore Property News and Views


HDB resale prices slide 0.2% in Q2

Housing and Development Board (HDB) resale flat prices dipped 0.2 per cent in the second quarter of this year compared with the quarter before, according to the latest HDB flash estimates released on Monday.

The resale price index was 130.8, down from 131 in the first quarter of the year. The final figures, with more detailed public housing data, will be released on July 26.

The HDB will be offering about 3,300 Build-To-Order (BTO) flats in Punggol and Tampines in August, and about 4,500 BTO flats in Ang Mo Kio, Tampines and Tengah in November.

There will also be a concurrent Re-Offer of Balance Flats (ROF) exercise and Sale of Balance Flats exercise in August and November.

ROF flats that have not been selected are available for open booking by eligible home seekers throughout the year, the HDB said.

OrangeTee & Tie’s head of research and consultancy Christine Sun noted that the second quarter decline is at a marginally slower pace compared to the 0.3 per cent decrease in the previous quarter.

She said that while this is a fourth consecutive quarterly decline, prices have dipped only 0.7 per cent over the last year and have been fluctuating within a very narrow margin over the last 18 quarters, indicating that resale prices have stabilised.

“HDB resale prices have moderated as competition for buyers may have intensified with more HDB flats being placed in the resale market in recent months,” she said.

“Many HDB owners may be interested to upgrade their properties once their flats are eligible for resale, and a whopping 30,000 HDB flats will have reached their five-year minimum occupation period this year.

“Prices may continue to stabilise after the government announced policy changes that allow buyers to use more Central Provident Fund monies to buy HDB flats. The changes may spur demand for some older flats.”

She said they expect HDB resale transactions to continue to rise this year while prices may face further downward pressure from the increasing flat supply in the coming months.

More information on BTO flats and ROF flats are available on the HDB InfoWeb.

Source: https://www.businesstimes.com.sg/real-estate/hdb-resale-prices-slide-02-in-q2

Adapted from: The Business Times, 2 July 2019


Q2 home prices post surprise rise, but analysts call it an anomaly

One factor could be developers pricing in high land costs incurred in last land acquisition cycle; sustained uptrend unlikely

APARTMENT and condo prices in Singapore rose by 1.3 per cent in the second quarter of 2019 – catching market watchers by surprise.

The rise erases the declines that had set in after Q3 last year.

Based on the Urban Redevelopment Authority’s (URA) flash estimate on Monday, the private property price index for Q2 would be the highest since the first quarter of 2014.

Several analysts believe Q2’s price rise to be a blip. They say the factors behind the uptick may not necessarily point to a resurgent market, thus putting to rest fears that it could trigger further cooling measures.

For the quarter just ended, price gains were led by the prime and city-fringe districts.

Prices of non-landed private residential properties rose by 1.5 per cent in the Core Central Region (CCR); in Q1, they fell 3 per cent.

In the Rest of Central Region (RCR), prices rose by 3 per cent after having registered a decline of 0.7 per cent in the previous quarter.

Prices in the Outside Central Region (OCR) went up 0.5 per cent, following the preceding quarter’s 0.2 per cent increase.

Barclays regional economist Brian Tan said in a research note: “We doubt the government will sit on its hands if property prices continue to rebound despite the cooling measures, especially when GDP growth is under greater pressure now than last year.”

Monetary Authority of Singapore (MAS) Managing Director Ravi Menon said last week that the cooling measures of July 2018 were intended to curb the “real possibility that property price increases would again run ahead of economic fundamentals”.

Some argue that prices won’t continue a strong uptrend from here. CBRE’s head of research at South-east Asia Desmond Sim called the price increase in Q2 an anomaly, given the rising unsold inventory to come from more launches and the downward revision of economic forecasts.

Colliers International’s head of research for Singapore Tricia Song said: “One swallow does not make a summer make and one quarter of price growth does not necessarily indicate an uptrend henceforth. We think developers will remain prudent in their pricing strategy, eschewing any sudden sharp increase in prices – particularly for projects that are moving slowly.”

Savills’ head of research and consultancy Alan Cheong said that prices have been rising because of high land costs that developers bid for in the last land acquisition cycle.

He added: “They are translating that high land cost to selling land prices. It’s purely because of the high break-even, not because developers are profiteering.”

Based on JLL’s analysis of caveat data, transactions in the city-fringe of non-landed homes with prices exceeding S$2,300 psf made up a fifth (20.4 per cent) of all non-landed homes in this market segment in Q2, compared to only 1.2 per cent in the first quarter.

These included Amber Park, which moved 157 units at a S$2,475 psf median price, and Sky Everton, which sold 100 units at a S$2,524 psf median price.

JLL’s senior director for research and consultancy Ong Teck Hui said certain projects may have been attractive and generated demand … It doesn’t signal recovery in the pipeline.”

His analysis showed that the proportion of sales above S$3,000 psf rose to 21.9 per cent during the quarter from 17.2 per cent in Q1.

Among these transactions, Boulevard 88 moved 34 units at a median price of S$3,692 psf and 3 Cuscaden sold 27 units at median of S$3,601 psf.

“In spite of whatever the market is going through, people still see long-term value in investing”, he said.

Government data released last month showed that home loans had shrunk for the fifth straight month in May.

Christine Li, senior director and head of research for South-east Asia, said one reason could be the lower volume of resale transactions in Q2.

Based on CBRE’s analysis of caveats, resale volume fell 54.3 per cent – from 7,146 units in H1 2018 to 3,266 units in H1 2019.

New sales, on the other hand, remained fairly stable at 3,874 units in H1, versus 3,688 units in H1 2018.

On a year-on-year basis, the price index based on the flash estimate would have increased just 1.1 per cent, compared to the year-on-year gain of 3.1 per cent in Q1 2019.

CIMB economist Song Seng Wun said: “Where there may be some volatility quarter-on-quarter, the underlying trend of the market is … consistent with underlying economic growth.”

The flash estimates were compiled based on prices given in contracts submitted for stamp-duty payment and data on units sold by developers up till mid-June. They will be updated on July 26.

The URA said that past data has shown that the difference between the quarterly price changes indicated by the flash estimate and the actual price changes could be significant even when the change is small; the public is therefore advised to interpret the flash estimates with caution.

Source: https://www.businesstimes.com.sg/real-estate/q2-home-prices-post-surprise-rise-but-analysts-call-it-an-anomaly

Adapted from: The Business Times 2 July 2019


Private home prices in surprise rise to five-year high; analysts divided on where they are headed

Prices of non-landed private residential properties rose by 1.5 per cent in the Core Central Region compared to the 3 per cent fall in the previous quarter.

Private residential property prices rallied in the second quarter to hit a five-year high, flash estimates noted yesterday.

Increases in the city centre and city fringe helped lift the price index by 1.3 per cent to 150.5 points – the highest since the first quarter of 2014, when the index was at 151.3. The rise for the three months to June 30 comes after a 0.7 per cent decrease in the first quarter.

Ms Christine Li, head of research for Singapore and South-east Asia at Cushman & Wakefield, said the increase was unexpected given renewed global market volatility and the China-United States trade war.

She pointed to Singapore’s status as a “safe haven”, which helped sustain sales even amid uncertain times.

“This shows that investors and buyers are still positive on the long-term prospects of the residential market and take the short-term volatility in their stride,” said Ms Li.

Yesterday’s flash estimates from the Urban Redevelopment Authority (URA) showed increases across the island.

Prices of non-landed private homes rose 1.5 per cent in the core central region compared with the 3 per cent fall in the previous quarter. The rest of central region recorded a 3 per cent rise after the 0.7 per cent decline in the first quarter.

Values in the outside central region increased 0.5 per cent following last quarter’s 0.2 per cent lift.

Ms Christine Sun, OrangeTee & Tie’s head of research and consultancy, pointed to new home sales as a big factor in the upturn, noting that many projects have been selling at new benchmark prices for their locations in recent months.

Her analysis of URA data shows that 367 new homes in the rest of central region were sold at $2,000 per sq ft (psf) or more in the second quarter compared with just 31 in the previous three months.

JLL senior director of research and consultancy Ong Teck Hui said last year’s cooling measures did not seem to deter buyers.

HDB will be offering about 3,300 Build-To-Order flats in Punggol and Tampines in August, and about 4,500 BTO flats in Ang Mo Kio, Tampines and Tengah in November.

“The key observation from the flash estimates is the firm demand for new high-end homes in (the city centre) as well as attractive locations in the (rest of central region) in spite of the cooling measures,” he said. “This should augur well for potential launches with such attributes as there is a fair chance of them achieving better sales take-up.”

The estimates were compiled based on prices given in contracts submitted for stamp duty payment and data on units sold by developers until mid-June. They will be updated on July 26.

Analysts were split on price direction.

Mr Desmond Sim, CBRE’s head of research for Singapore and South-east Asia, believes the rise in the index is a mere blip, and it will remain “relatively stable with downward pressure coming only in the mid to long term” because of the uncertain global economy and rising inventory.

On the other hand, OrangeTee & Tie is forecasting price increases of between 1 per cent and 3 per cent for the whole of this year, while Morgan Stanley analyst Wilson Ng expects price growth to be sustained.

Meanwhile, Housing Board resale flat prices dipped 0.2 per cent in the second quarter compared with the previous three months, according to HDB flash estimates yesterday.

Source: https://www.straitstimes.com/business/property/private-property-prices-hit-five-year-high-flash-data

Adapted from: The Straits Times 2 July 2019


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