PDF versionSingapore, - According to the Urban Redevelopment Authority’s (URA) quarterly statistics, overall prices in the private residential property market have declined by 2.4% quarter-on-quarter (qoq) in 3Q 2008, steeper than earlier flash estimate figures that indicated a 1.8% qoq drop. Specifically, both overall landed and non-landed properties witnessed a fall this quarter, by 1.9% qoq and 2.5% qoq respectively.
In terms of the non-landed market segments, all regions saw prices saw prices easing in the third
quarter. For the prime market segment (Core Central Region), the contraction of price growth from the
previous quarter saw rates weaken further by 2.7% qoq in 3Q 2008. Similarly, private home prices in
the mid-tier (Rest of Central Region) recorded a smaller fall of 2.4% qoq this quarter. As the prime and
mid-tier markets have led the robust price growth over the past three years, we expect these two
segments to be the first to experience price softening. On the other hand, average prices in the massmarket
private home segment are a laggard with a slower start in terms of price expansion in 2005. As
such, the third quarter saw the rate of change in the mass market prices decline by a smaller 1.5%
qoq.
Mirroring price movements, the private rental market has also eased when it recorded its first drop in over four years, by 0.9% qoq in 3Q 2008. Despite this, yearly rental growth rates are still experiencing double-digit growth of 15.1% yoy. Unlike the movement in prices, rentals of non-landed property in all the three regions decreased this quarter and ironically, it was the mass market that saw the strongest decrease in rentals of 2.7% qoq as some of the demand for mass-market rental apartments are being drawn to the HDB rental market. On the other hand, the abatement in both the prime and mid-tier rentals was slight, by 0.7% qoq and 0.5% qoq.
With escalating concerns in financial markets, the private residential sector in 2008 has performed well
below what was achieved in 2007 in terms of both launches and sales. Developers launched a total of
5,401 private homes for sale in the first 3 quarters of this year. This is only a mere 44% of the total
launches in the initial 3 quarters of 2007. In 3Q 2008, developers sold about 1,558 private homes,
which was about the same figure in the previous quarter. In the first nine months of this year,
developers sold a total of 3,845 private homes, which is only 29% of the sale figures in the
corresponding period in 2007.
Developers appear to be pushing back the completion dates of their projects due to the softening
market environment. Based on the 2Q 2008 property statistics, about 41,765 private homes were
expected to be completed from 2009 to 2011. But based on the figures released today, the number of
homes expected to be completed from 2009 to 2011 dropped to 34,716. On the other hand, the
number of private homes expected to be completed from 2012 onwards increased from 25,000 to
30,300. This could lighten some of the downwards pressure on residential rental rates in the next two
years.
URA’s new breakdown of pipeline supply by regions shows that the mass-market region is expected to
potentially see a greater number of units enter the market (35.6%) of about 23,678 units. This is
subsequently followed by the prime private residential market, which would comprise of a marginally
smaller proportion (34.6%) of about 23,008 private homes. Figures show that the bulk of completed
units in both these regions are anticipated to enter the market in 2011. The mid-tier market on the
other hand will see a smaller proportion of completed units consisting of about 19,736 homes, in the
market in the next few years.
Going forward, it is projected that the price and rental decline is likely to persist. It is estimated that for the entire 2008, private residential prices will see growth between 0% to -3% year-on-year (yoy). With the slowdown in the private residential market, it is anticipated that primary market launches will fall within the range of 7,200 – 7,900 units while primary market sales could possibly register between 4,900 – 5,400 units in 2008, which would be only about one-third of the primary market sales in the previous year.
Nicholas Mak, Director of Consultancy & Research Department, Knight Frank, +65 6228 6821
Knight Frank and its New York-based partner, Newmark Knight Frank, operate over 140 offices in established and emerging property markets on five continents. Last year, the companies handled transactions valued at over $41billion with annual revenues of over $545 million.
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