(B) The overall performance of private residential property segment

[B.1] Private home prices continue down trend as export stalls

The final quarter of 2008 (Q4) saw the steepest drop in private home prices in a decade – shedding 5.7% quarter-on-quarter. This is on top of the 2.4% overall drop in home prices in the previous quarter (Q3) of 2008. (See Table [1] below for details)

The price fall in consecutive months brought the overall price growth to the negative region of minus-4.3% for the whole of 2008 year-on-year. This is a stark contrast to the 31.2% price hike in private home in 2007.

Since late 2007, potential buyers have played the ‘wait-and-see’ game; and their patience has been rewarded with cheaper home prices over the months.

In Q4 2008, prices for apartments in the Core Central Region (CCR) were down 6.3%; while those in the Rest of the Central Region (RCR) slipped 5.5% and Outside Central Region (OCR) dropped by 4.7%. This follows declines of 2.7%, 2.4% and 1.5% respectively in those areas in Q3 2008. See Table [1] for details.

Table [1] – price of non-landed private home dropped across all regions

Looking over the horizon, private home prices are likely to stay down for at least the next six to nine months as the property market will have to digest the over-supply situation amid one of the worst global recession in decades.

Prospective buyers sitting on the fence certainly feel vindicated and are likely to persist in their strategy of ‘sitting out the crisis’.

[B.2] Primary home sales did better in November 2008

Primary home sales did slightly better in November 2008 only because the sale figures were compared with the ‘flat performance’ of 112 sales transactions in the preceding month. The overall sales volume rose to 192 transactions – which could only be described as an ‘indifferent’ performance. See Tables [2] to [6] for details.

Table [2] – New homes sold in November 2008

The unsold inventories of new home units continue to pile up with unsold units outweighing sold units by 6,033 to 4,208. (See Table [3] for details)

Table [3] - Monthly sale figures of new home units launched in the respective months

Source of data – URA

[B.2.1] Performance of primary sales in Core Central Region (CCR)

Out of the 188 brand new condo projects on sale in the Core Central Region, only 6 projects had some sales. In all, the total new units sold in CCR in October 2008 were 63.  See table below for details.

Table [4] – Performance of private new home sales in CCR in November 2008

Source of data – URA

[B.2.2] Performance of primary sales in Rest of Central Region (RCR)

Out of the 123 brand new condo projects on sale in the Rest of Central Region, only 13 projects had some sales. In all, the total new units sold in RCR in Nov 2008 were 28. See table below for details.

Table [5] – Performance of private new home sales in RCR in November 2008

Source of data – URA

 [B.2.3] Performance of primary sales in Outside Central Region (OCR)

Out of the 140 brand new condo projects on sale in the Outside Central Region, only 19 projects had some sales. In all, the total new units sold in OCR in November 2008 were 101. See table below for details.

Table [6] – Performance of private new home sales in OCR in November 2008

Source of data – URA

[B.3] Secondary home market faces steep challenges in 2009

[B.3.1] Secondary sales of Condo/Apt in Nov-Dec period halved

The revised November 2008 secondary sales figures fell way short of expectation, falling more than 50% of October’s transactions. The December 2008 interim figures fared even worse. (See Table [7] below for the full-year secondary sales performance of condo/apartments).

This is clear evidence that home owners and buyers alike are wary of the current market situation, preferring to be ‘safe than be sorry’. The current economic downturn, which has been exacerbated by the on-going corporate layoffs and insolvencies, is expected to continue to suppress buying activities for at least the next six months to a year. The near term prospect for secondary sales do not look good.

Table [7] – Total Secondary Private Sales of condo/apartments so far in 2008

Source of data – SISVRealink

*Interim figures according to the latest search results on 10 January 2009. The final figures will be revised in the next update in February 2009.

[B.3.2] Sales of Landed Homes slide

The overall sales of landed homes in Q4 were clearly affected by the on-going stock market turmoil and in particular the 10 Oct stock market meltdown all over the world. (See Tables [8] to [10] for the full-year secondary sales performance of landed property by house types).

Table [8] – Transaction figures of Detached houses in the whole year of 2008

Source of data – SISVRealink

Table [9] – Transaction figures of semi-detached houses in the whole year of 2008

Source of data – SISVRealink

Table [10] – Transaction figures of Terrace houses in the whole year of 2008

Source of data – SISVRealink

[B.4] Property investment sales slow to a trickle

Investment sales – an effective gauge of developers' and investors' medium– to long–term confidence in the investment climate – are likewise in the doldrums in 2008, giving a faithful reflection of the currently weak market sentiment. The total investment sales of Singapore real estate achieved for 2008 (up to 9 December 2008) were just $17.8 billion, year–on–year. This is a far cry from the record $54 billion achieved for the whole of 2007 in investment sales.

In 2008, the residential sector brought in $6.25 billion worth of transactions and accounted for 35% of total investment sales. The breakdown of the various residential property transactions is as follows:

Collective Sales
A total of seven collective sales worth a total $371 million were transacted in 2008. In 2007, a total of 111 collective sales worth a total of $12.4 billion were transacted.

Good Class Bungalows
A total of 48 Good Class Bungalow (GCB) transactions worth $763.7 million were done in 2008, down from $1.2 billion from 90 deals in 2007.

Office investments
Office investment sales worth $5.4 billion were transacted in 2008, compared with $14.3 billion for full-year 2007.

Industrial property
The only growth came from the industrial property sector where a 66% growth was recorded. A total of $3.32 billion of investment sales deals were done in 2008, the best showing since 2002.

About 50% of the industrial investment sales for 2008 were accounted for by JTC Corporation's $1.7 billion divestment of its industrial portfolio to a joint venture involving Mapletree Investments, Arcapita and Mapletree Industrial Fund.

[B.5] Auctioneers expect more mortgagee sales in 2009

Given that the loan default rate will rise due to the worsening economic situation and the rapid rise in unemployment, most auctioneers expect mortgagee sales to increase next year by leaps and bounds.

In fact, mortgages sales had already inched up in 2008 in the aftermath of the various major stock market clashes in the year. Out of the $69.1 million auction sales in 2008, about 36% were mortgagee sales, slightly higher than the 32% mortgagee sale share of the total $422.3 million auction sales in 2007.

Besides, there may be a significant jump in the number of speculators and investors, who bought their properties with the defunct Deferred Payment Scheme (DPS), dumping their properties onto the market before the completion dates draw nearer.

A veteran auctioneer reckoned that 'success rates at auctions may improve if a continued worsening in economic conditions forces some sellers to further lower reserve prices and satisfy the price expectations of some buyers who are bottom fishing'.

[B.6] Home rents set to fall as more previously en bloc projects come back for lease

More condominium and apartment projects that were sold collectively during the 2006/07 property bull-run have been put back by their new owners on the market for rental. Below are some recent examples:

All the 91 units at Lucky Tower at Grange Road, which was snapped up by city Developments Ltd (CDL) in May 2006, have been leased to one single tenant.

OUE, the developer who purchased The Grangeford at Leonie Hill has similar plan to lease out all the 192 units in the District 9 project.

Frasers Centrepoint has so far rented out about 60% of the 185 units at Flamingo Valley at Siglap, which it acquired in early 2007.

Other en bloc developments back on the rental market include Pin Tjoe Court, Furama Towers, Fairways Condominium, Sophia Court, and Lincoln Lodge.

This means that the potential supplies of new apartment units will be fewer going forward. However, the flip side of the coin is that home rents are expected to ease due to the increase in supply of rental properties in prime locations.

Read the latest updates on other property segments:

Part 1:The economy at large

Part 3:Movements in the non-residential property sector, collective sales and foreign interest in Singapore

Part 4:Updates on the GLS Programme and HDB resale market