OrangeTee Private Residential Market report for Q4 2018

Private home prices rose 7.9 per cent despite the new cooling measures introduced last July.

Non-landed home prices rose across all sales types and market segments, with some reaching record high in 2018. New home prices in CCR increased the most by 27.2 per cent year-on-year.

Mass-market new homes sold more than double the units launched last year.

Total rental transaction value reached a new high since 2000.

New home prices rose despite cooling measures

Private home prices rose 7.9 per cent last year despite new cooling measures introduced last July. The price increase was mainly from the first two quarters of last year when many new private homes were sold at relatively high prices amid the collective sales frenzy.

On a year-on-year (y-o-y) basis, prices continued to rise across most market segments, with some reaching record highs in 2018.

However, developer home sales fell 16.8 per cent y-o-y to 8,795 units last year while resales fell 7.4 per cent y-o-y to 13,009 units under the combined effects of the Additional Buyer’s Stamp Duty (ABSD), Total Debt Servicing Ratio (TDSR) and global economic slow-down.

Park Colonial, Condo.

Nevertheless, some projects continued to sell well due to their good location, distinct product features and strong marketing campaigns. Last year, the best-selling new projects were Riverfront Residences, The Tapestry and Park Colonial while the most popular resale projects were The Crest, New Futura and The Minton.

The Crest, Condo.

We expect demand for new homes to hold ground this year as more than 19,000 new homes could be launched ready (Page 10). Many of these developments are expected to be priced at the ‘sweet spot’, offering many unique selling features.

Investors and foreigners may stream back to the market as they may view residential properties here to be better investment assets in light of the current economic uncertainties and stock market volatility.

Market Overview

Prices have risen across the board on a y-o-y basis in 2018. According to URA’s property price index (Chart1), the price of non-landed homes rose 8.3 per cent while landed properties rose 6.3 per cent y-o-y.

By market segments, the price of non-landed homes in CCR rose 6.7 per cent while those in RCR and OCR increased by 7.4 per cent and 9.4 per cent respectively. Price of non-landed homes in OCR (index = 170.7) in Q4 2018 has reverted to their previous record high in Q3 2013 (index = 170.9).

Non-landed home prices across all sales types and market segments had also reached historical highs in 2018 (Chart 2). According to URA Realis data downloaded on 28 January 2019, the average price of non-landed new homes in the CCR increased 27.2 per cent y-o-y to S$2,806 psf in 2018 (Table 2). Non-landed new sales in RCR rose 6.3 per cent y-o-y to S$1,764 psf while those in OCR rose 6.3 per cent to S$1,404 in 2018.

For non-landed resales, prices rose the most in RCR (9.0 per cent), followed by OCR (7.7 per cent) and CCR (7.2 per cent). For the first time, the average price of non-landed resale homes in OCR has breached the S$1,000 psf mark.

Outlook for 2019

We expect the price growth for the overall market may slow down this year to between 1 and 3 per cent in view of the substantial pipeline supply of private homes. For new homes, prices may rise between 1 and 4 per cent as some projects will be launched from land parcels that were bought at relatively high cost.

Prices of resale homes may remain flat or rise marginally by 1 and 2 per cent in tandem with new sale prices

The Crest, Condo. Picture: OrangeTee

Based on our estimation, about 19,000 new homes could be launch-ready this year.

However, developers are likely to space out their launches to avoid head-on competition with other developments and to intermittently release units over several months to maintain prices. Therefore, the actual number of units launched for the full year could be around 13,000 to 14,000 units, with the balance possibly spilling over to 2020-2021.

The sales momentum for new homes may remain at current level or rise marginally to between 10,000 and 12,000 this year.

According to URA, the expected number of private residential completions (excluding ECs) in 2019 has dipped from 10,119 (projection as of Q3 2018) to 8,926 (as of Q4 2018), possibly because more projects were completed earlier than expected.

As the number of completions, this year is around the same level as last year (9,112 units), just 2.0 per cent lower, rents may remain flat between -1% and 1% this year.

For the full report, click here.

Article is contributed by OrangeTee.