Date: 24 April 2009 | PDF version

Analysis of Singapore Residential Statistics – 1Q 2009

Singapore,
As Singapore’s fiscal health continues to slip, official statistics correspondingly reflect a somewhat distressed private residential property sector. However, there are also some silver linings in the figures released today.

According to the Urban Redevelopment Authority’s (URA) quarterly statistics, overall prices in Singapore’s private residential property market have eased by 14.1% quarter-on-quarter (qoq) in 1Q 2009. This was more pronounced than the 13.8% qoq decrease based on flash estimates, an indication that the average price contraction accelerated in the last three weeks of 1Q 2009. The deteriorating quarterly price growth of 14.1% qoq was also the most significant since 1990. Almost similar quarterly reduction in price growth was captured in 3Q 98 when prices eased by 13.2% qoq. Specifically, both overall landed and non-landed properties witnessed a more marked fall this quarter, by 9.2% qoq and 15.2% qoq respectively.

In terms of the non-landed market segments, while it is no longer unexpected that all three regions experienced continued reduction in prices, it was the mid-tier Rest of Central Region that recorded the sharpest fall (-17.0% qoq). This was followed by the prime Core Central Region and the mass Outside Central Region that witnessed prices wane by 16.2% and 7.3% respectively. In particular it was the large volume of home sales in the mass market that aided in the lesser rate of price decline in this region.

Total primary sales in the suburban Outside Central Region in 1Q 2009 reached a level to almost what was achieved in the entire 2008. A total of 1,637 units were sold in the primary market, amounting to 64% of all primary market sales islandwide. On the contrary the prime market managed to garner a meagre 9.5% of all primary market sales. The launch market performed similarly, with 63% of all new launches found in the mass market. This compared to the record low (data available since 1Q 2004) 100 units launched in the prime market in 1Q 2009.

The residential rental market, though not as equally fraught as residential prices, experienced its third consecutive quarterly decline, falling by 8.5% qoq in 1Q 2009. In terms of the non-landed market, it was the prime market with the steepest fall of 10.3% qoq followed by the mid-tier and mass-market segments that eased by 7.2% and 6.5% respectively. The weakening rental market illustrated that islandwide rentals are 14.2% shy of the peak achieved in 2Q 2008.

The Housing Development Board’s (HDB) official statistics for HDB resale prices in 1Q 2009 was not far off from previous flash estimates – resale prices declined by a marginal 0.8% qoq, its first quarterly decline since 3Q 2006. Notwithstanding this, resale prices are still hovering at healthy levels, at about 2% above the 1996 peak and 0.8% shy of the most recent peak in 4Q 2008. While official statistics suggests resale prices held relatively steady in 1Q 2009 and still serves as an affordable option, circumstances could alter as soon as the economic situation influences overall homebuying sentiments. The average prices of the smaller flats decline by a smaller amount, ranging from 0.3% to 0.5%. The larger flats experienced a slightly higher rate of price fall of between 0.5% for 4-room flats and 2.8% for Executive flats. However, we do not expect the decrease in HDB resale prices to dent the upgraders’ demand for private properties because the rate of price fall of HDB resale flats is still smaller than that of private homes.

Going forward, it is anticipated that private home prices and rents will contract sharply in the first half of 2009, but the rate of decline will decelerate consequently. In regard to sale volume, it is unlikely that the low sale volume in the primary market experienced in 2008 would be repeated this year. Based on the encouraging home sale volume achieved by developers in the first quarter of 2009, the total primary market sale level this year is projected to range between 6,500 and 8,000, about 50% to 90% higher than that in the previous year.

For further information, please contact:

Nicholas Mak, Director of Consultancy & Research Department, Knight Frank, +65 6228 6821

Notes to Editors

About Knight Frank

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.

For more information about Knight Frank, please visit www.knightfrank.com

Disclaimer
The information and any opinions, forecasts or views contained or expressed in this document and the related presentation are for the use of the intended recipient identified by Knight Frank Pte Ltd. Neither Knight Frank nor any of their affiliates is the same or makes any representations or warranties or accepts any liability in relation to the same.