It has been released a second quarter Real Estate Highlights for the Singapore market covering the residential, retail, office and investment sales markets.
According to the report, overall market sentiment has turned markedly cautious as eurozone debt crisis deepened and major economies slowed. The global economic recovery, which was not strong to start with, has shown emerging signs of weakness by the middle of 2017, said the report, while the Euro zone debt crisis deepened in the second quarter as contagion has spread from peripheral economies to the major economies. As a result the top 2 economies, US and China, recorded slower year-on-year GDP growth in 2Q 2017, said the report.
According to the report, the Singapore economy shrank by 0.7 per cent quarter-on-quarter in 2Q 2017, reversing the 9.5 per cent growth in 1Q 2017. On a year-on-year basis, overall GDP grew by 2 per cent in 2Q 2017 compared to 1.5 per cent in the previous quarter. The quarterly contraction is mainly due to a decline in externally-oriented sectors such as electronics manufacturing, wholesale trade and tourism-related services.
In the residential market, developers new sales fell 17 per cent quarterly in 2Q 2017 with 5,402 units. Private property prices increased 0.4 per cent quarterly after a minor correction of 0.1 per cent in 1Q 2017. Prices of resale HDB flats reached a record high in 2Q 2017 at 1.3 per cent q-o-q increase.
Developers sold a total of 5,402 units (excluding Executive Condominiums), including 5,313 uncompleted units and 89 completed units, in 2Q 2017 (Exhibit 1). Although sales fell by 17 per cent quarter-on-quarter (q-o-q), the average monthly sales recorded 1,801 units on three-month average basis, significantly higher than the average monthly new sales of 1,364 units in 2016. On a six-month average basis, developers sold 1,988 units monthly in 1H 2017. This could set a new norm in the residential primary market where developers are expected to sell about 2,000 units monthly.
Outside Central Region (OCR) accounted for the bulk of developers’ sales or 70 per cent of the total new sales in 2Q 2017, lower than the 82 per cent proportion in 1Q 2017. Sales in mid-market (Rest of Central Region RCR) and high-end (Core Central Region – CCR) segments increased in 2Q 2017 where developers sold 1,183 units and 403 units, respectively. In 1Q 2017, new sales in RCR and CCR recorded only 1,061 units and 129 units, respectively.
The report said resale volume of private residential properties also increased in 2Q 2017, recording 3,487 units, 58 per cent higher than 2,206 units sold in secondary market in 1Q 2017 (Exhibit 2). Demand for resale properties increased on the back of fast rising prices of new launches across the island. As new launches set new benchmarks for property prices, some home buyers turned to the resale market for perceived better value for money properties, immediate occupation needs, and more location options.
URA quarterly statistics show 0.4 per cent q-o-q increase in overall property price index in 2Q 2017, compared to 0.1 per cent decrease in 1Q 2017. One main factor for the rebound of private residential prices lies in the strong recovery of completed non-landed property prices with an increase of 2.3 per cent, which was partially offset by the 0.9 per cent decline of uncompleted non-landed residential property prices. The decrease indicates the moderation of the current high prices, with the Additional Buyer’s Stamp Duty (ABSD) taking effect on foreign buyers’ demand coupled with an increased supply of new homes available in the market.
Prices in high-end and mass market segments also increased marginally at 0.6 per cent (Core Central Region) and 0.4 per cent (Outside Central Region) on a quarterly basis, respectively. There was no change in mid-end home prices in Rest of Central Region.
Based on Knight Frank residential property basket, average prices of high-end and mass market properties in 2Q 2017 reached $ 2,256 psf and $1,539 psf, an increase of 3.4 per cent and 2.7 per cent q-o-q, respectively. Prices of mid-tier homes fell by 0.8 per cent in 2Q 2017. The price rebound was quite significant when compared to the 4.3 per cent, 0.6 per cent and 0.4 per cent price decreases in high-end, mid-tier and mass market segments in 1Q 2017, respectively.